Consumer Watchdog filed a “friend of the court” brief urging the California Supreme Court to reaffirm the ability of nonprofits and other groups to sue on behalf of the public under California’s unfair competition.
Consumer Watchdog filed its amicus brief on behalf of the plaintiff in the case, California Medical Association. The lawsuit against Aetna Health of California addresses the issue of access to physicians outside of an insurer’s network, known as “out-of-network” physicians.
Download the brief here.
In the upcoming case, the California Supreme Court will decide whether organizations acting on behalf of the public have ‘standing’ to sue under the state’s unfair competition law – the ‘UCL’. . Organizational status under UCL was called into question after the passage of Proposition 64 in 2004, which added a requirement that complainants must show that they have “lost money or property” as a condition for taking legal action.
As the Supreme Court held in an earlier case, “UCL’s objective is to protect both consumers and competitors by promoting fair competition in commercial markets for goods and services” and its ” scope is wide. (Kasky vs. Nike, Inc. (2002) 27 Cal.4th 939, 949.)
Consumer Watchdog argued in its factum filed with the Court today that:
“The Court of Appeal’s decision below, if not changed, will have a significant impact on organizations seeking to bring claims both at UCL and outside of UCL , effectively preventing member organizations from taking direct action for injuries personally sustained in responding to and assisting their members. [Aetna] would have this Court go even further, arguing that the doctrine of direct organizational status is inconsistent with Proposition 64, which would bar all organizations, members or not, from seeking relief under the UCL for harms that they suffer when a respondent interferes with their organizational mission. ”
Recognizing direct organizational status as an appropriate means of showing UCL’s status directly serves UCL’s overall redress goal to protect consumers, according to Consumer Watchdog.
The California Medical Association sued Aetna over its policy to restrict or eliminate patient referrals to out-of-network physicians, which is critically important for patients with serious illnesses who need access to specialists. The California Medical Association argued that Aetna’s policy harmed the public by interfering with the ability of its member physicians to exercise “good medical judgment”.
The Court of Appeals erroneously concluded that when California voters passed Proposition 64 in 2004, voters intended to prevent lawsuits by organizations on behalf of the public. In fact, UCL, as amended by Proposition 64, is entirely compatible with the doctrine of “direct organizational status”. The California Medical Association appealed to the California Supreme Court to overturn the lower court’s decision.
“It’s extremely important to California consumers that organizations have the ability to challenge anti-consumer practices by filing lawsuits on behalf of the public,” said Ryan Mellino, attorney at Consumer Watchdog. “It is critical that the California Supreme Court recognize that the direct organizational status doctrine is fully consistent with UCL after Proposition 64, and reject the invitations of the Court of Appeals and Aetna to hold otherwise.”
Proposition 64 targeted so-called “shakedown lawsuits” by amending the UCL to require all plaintiffs (including organizations) to suffer economic harm before bringing a lawsuit.
Under the doctrine of “direct organizational status,” an organization suffers economic harm when it diverts resources to protect the public. This is the conclusion reached by the Court of Appeal in the case Animal Legal Defense Fund (“ALDF”) c. LT Napa Partners LLC (2015) 234 Cal.App.4th 1270. Consumer Watchdog urged the California Supreme Court to adopt the reasoning of the ALDF court and reject the illogical decision of the Court of Appeal in this case which ignores the plain language of the law.
The case before the California Supreme Court is California Medical Association v AetnaCase No. S269212.