Neonatology Associates, Ltd. v. Phoenix Perinatal Associates Inc. – 8/21/2007

August 28, 2007

Arizona Court of Appeals Division One Holds that Doctor Group’s Referral of Patients to Out-of-Network Insurance Provider Does Not Constitute Intentional Interference with the Network Provider’s Contract.

A group of perinatologists joined with a group of neonatologists to form Obstetrix. After forming Obstetrix, the perinatologists began referring their neonatal patients to Obstetrix neonatologists, an out-of-network provider, and Obstetrix neonatologists would treat patients without compensation if the patients’ plan refused to pay for Obstetrix neonatologist services. Neonatology Associates, Ltd, the in-network group of neonatologists to which these patients were referred before the formation of Obstetrix, sued for intentional interference with NAL’s contract with the relevant health care plans.

The trial court granted summary judgment to Obstetrix, and the Arizon Appeals Court affirmed, finding no reasonable inference in the record that Obstetrix perinatologists’ practice of routinely referring their patients to Obstetrix neonatologists was improper. Applying Miller v. Hehlen, 209 Ariz. 462, 104 P.3d 193 (App. 2005), the Court rejected NAL’s argument that Obstetrix’s motives were improper because its self-referral practice was business-driven, concluding that acting in economic self-interest is not, in and of itself, improper.

Opinion authored by Judge Ehrlich, with Presiding Judge Winthrop and Judge Weisberg concurring