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Sep 2016

Just When Does the SOL Clock Start Ticking?

In the real world, the acronym “SOL” has a couple meanings. In the legal world, it remains two different sayings with pretty much the same meaning. The clean, legal version of “SOL” is statute of limitations, which is the maximum time after an event within which legal proceedings may be initiated. When the period of time specified in the statute of limitations passes, a claim may no longer be filed in court or designated legal tribunal.

Knowing when this deadline occurs is very important. Equally important is a provider knowing when the clock starts. The starting point is critical knowledge for every provider in making sure their reimbursement dispute is not sidelined by a blown deadline.

A recent California case, Vishva Dev, M.D., Inc. v. Blue Shield of Cal. Life and Health Ins. Co. (Aug. 31, 2016, B270094) __ Cal.App.4th __ [2016 WL 4538397], has come to a unique conclusion under the specific facts of that case on when the SOL clock may start to run in non-contracted cases.

In this case, Dr. Vishva Dev provided emergency medical services to three patients who were insured by Blue Shield plans.  Dr. Dev was not contracted with Blue Shield. However, Dr. Dev billed Blue Shield tens of thousands of dollars for the emergency services rendered. Blue Shield issued explanation of benefits (EOB) letters stating that it would reimburse roughly 10 percent of the billed charges. Blue Shield offered to consider additional information if Dr. Dev opted to utilize the plans’ internal appeals process.

Dr. Dev appealed to Blue Shield with additional documentation, securing a small additional reimbursement for services rendered to just one of the three patients.  Dr. Dev then filed a quantum meruit action against Blue Shield.  The established SOL for quantum meruit actions (essentially where a contract is implied by the law where it was shown the performance was not intended to be unpaid) is two years from discharge. It has been recognized by courts that the provider is in possession of sufficient facts at the time of discharge to determine the existence of a payment dispute and thus, under the statute, the time period of two years begins to run.

The legal action in this case was filed more than two years after Blue Shield issued its EOB letters to Dr. Dev, but less than two years after the internal appeals were completed. The trial court granted summary judgment to Blue Shield on the ground that Dr. Dev’s lawsuit was untimely under the two-year SOL in Code of Civil Procedure section 339, having been filed more than two years after receipt of the EOBs. The court held that the issuance of the EOBs conclusively established the existence of a dispute, and thus, started the clock running. Blue Shield did not assert discharge as the trigger point for the SOL clock, and rather argued that the EOBs established the trigger.

The Court of Appeal affirmed the lower court’s ruling.  Because Blue Shield’s EOB letters unequivocally refused to pay the amount Dr. Dev billed, those letters triggered the clock to start running on the two-year statute. The court held that the limitations period was not tolled by Blue Shield’s willingness to consider additional information, or by Dr. Dev’s pursuit of Blue Shield’s voluntary internal appeals process.

Why is this ruling critical for providers?

The court has recognized that the issuance of EOBs can be the trigger point for the SOL under certain circumstances. The SOL clock starts to run as soon as the existence of a dispute is known to the party seeking payment. Previously, this was the date of discharge. In this case, the issuance of the EOBs established that the amount being sought by the provider was not being paid and thus, could under certain circumstances be used as the trigger date.

The takeaway lesson for hospitals, as well as physicians, is to be sure to set conservative follow-up deadlines for payment/denial from the payor, utilizing the date of service or discharge (if an inpatient claim). This proactive measure will make sure the critical claim does not become a crouton. However, if the claim is beyond two years from discharge, this case provides a potential lifesaver for pursuing the action.

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