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Health care coverage will continue for the San Francisco Trial Lawyers Association. On Monday, San Francisco’s First District Court of Appeal ruled that Health Net of California Inc. had not shown that continuing coverage for SFTLA would violate its license under the state Department of Managed Health Care. “Given the lack of any conclusive information regarding the scope of Health Net’s license,” Justice Carol Corrigan wrote in an unpublished ruling, “the superior court did not abuse its discretion in maintaining the contracts.” Justices William McGuiness and Stuart Pollak concurred. The SFTLA had sued the Woodland Hills-based insurer for breach after Health Net refused in 2003 to renew a 6-year-old contract. Health Net had argued that the association doesn’t qualify for coverage as a “guaranteed association” because it has fewer than 1,000 members and hadn’t provided benefits for at least five years prior to Jan. 1, 1992. SFTLA responded by saying Health Net entered into a contract and cannot terminate coverage without good cause, such as failing to pay premiums. The appeal court justices thought SFTLA had the better argument. “Health Net did not address below, and does not address here,” Corrigan wrote, “the association’s argument that the statutory protection for ‘guaranteed associations’ does not explicitly prohibit Health Net from issuing contracts to similar kinds of groups.” Health Net’s attorneys claimed that the case presented a licensing issue over which the courts had no jurisdiction. They pointed out that the Department of Managed Health Care had issued a letter stating that the insurer’s refusal to renew SFTLA’s policy didn’t violate health care statutes. The justices called the argument misplaced. “DMHC’s response merely confirms that SFTLA is not a guaranteed association, a fact that no one disputes,” Corrigan wrote. “DMHC did not address whether Health Net would be violating its license if it renewed contracts. “Indeed,” she held, “the department expressly noted that its determination did not prevent SFTLA ‘from pursuing, nor is it a substitute for, any other formal or informal legal proceedings or remedies that may be available.’” While the justices said San Francisco Superior Court Judge Ronald Quidachay hadn’t abused his discretion in granting SFTLA a preliminary injunction maintaining coverage, they ruled he erred by denying Health Net’s petition to compel arbitration. They sent the case back to Quidachay to determine whether Health Net’s arbitration clauses are enforceable. Pillsbury & Levinson partner Terrence Coleman, who represented the SFTLA, said Tuesday he was “absolutely thrilled” with the decision. “It provides some much-needed relief to our members and Health Net’s insureds to know they will have their health care coverage in place in the future,” he said. “What we do know is that Health Net did, and tried to do, the same thing to other associations up and down the state.” Coleman predicted victory on the arbitration issue too, based on Robertson v. Health Net, 132 Cal.App.4th 1419, in which another division of the First District on Aug. 31 invalidated Health Net’s arbitration clauses. The decision is San Francisco Trial Lawyers Association v. Health Net of California, A104458.

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