Group, Inc. dba Regal Lakeside and Affiliates; Eastland Medical Group, Inc. and Community GENERAL ALLEGATIONS. The Parties

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2 1 1 Plaintiff Greggory R. DeVore, M.D., a medial corporation, hereby asserts the following claims and causes of action, and seeks the following relief, against Defendants Heritage Provider Network, Inc.; Regal Medical Group, Inc. dba Regal Lakeside and Affiliates; Lakeside Medical Group, Inc. dba Regal Lakeside and Affiliates; Eastland Medical Group, Inc. and Community Medical Group of the West Valley, Inc.: GENERAL ALLEGATIONS The Parties 1. Plaintiff Greggory R. DeVore, M.D., a Medical Corporation ( Dr. DeVore ) is, and at all relevant times was, a California professional medical corporation engaged in the practice of fetal & maternal medicine and obstetrics & gynecology in the County of Los Angeles, California.. Dr. DeVore is informed and believes, and thereon alleges, that Defendant Lakeside Medical Group, Inc. ( LAKESIDE ) was incorporated in the State of California on April,, and is a professional medical corporation operating in the County of Los Angeles, California.. Dr. DeVore is informed and believes, and thereon alleges, that Defendant Eastland Medical Group, Inc. ( EASTLAND ) was incorporated in the State of California on February,, and is a professional medical corporation operating in the County of Los Angeles, California.. Dr. DeVore is informed and believes, and thereon alleges, that Defendant Regal Medical Group, Inc. ( REGAL ) was incorporated in the State of California on September,, and is a professional medical corporation operating in the County of Los Angeles, California.. Dr. DeVore is informed and believes, and thereon alleges, that Defendant Heritage Provider Network, Inc. ( HPN ) was incorporated in the State of California on May,, and is doing business in the County of Los Angeles, California. Dr. DeVore is further informed and believes, and thereon alleges, that HPN: (a) is a Health Care Service Plan as defined in the Knox- Keen Health Care Service Plan Act of, as amended; (b) received its limited Knox-Keene license on February, ; and (c) is licensed to provide services within the counties of Kern, Los Angeles, Orange, Riverside, San Luis Obispo, San Bernardino, Tulare, and Ventura.. Dr. DeVore is informed and believes, and thereon alleges, that Defendant Community Medical Group of the West Valley, Inc. ( COMMUNITY ) was incorporated in the State of --

3 1 1 California on July, 01, and is a professional medical corporation operating in the County of Los Angeles, California. The Relationship Between HPN, REGAL, LAKESIDE, EASTLAND and COMMUNITY. Dr. DeVore is informed and believes, and thereon alleges, that in or around the time of its incorporation on September,, REGAL became a member of an unincorporated network of medical groups and independent practice associations in Southern California commonly known as the Heritage Provider Network. Dr. DeVore is further informed and believes, and thereon alleges, that upon the incorporation of HPN on May,, REGAL became a wholly owned affiliated division of HPN, but continued to exist, and presently exists, as a separate California medical corporation.. Dr. DeVore is informed and believes, and thereon alleges, that on or about November, 0, EASTLAND was purchased by LAKESIDE, with EASTLAND becoming a wholly owed affiliate of LAKESIDE, but continuing exist, and presently existing, as a separate California medical corporation.. Dr. DeVore is informed and believes, and thereon alleges, that on or about September 0, 0, COMMUNITY merged with LAKESIDE, with COMMUNITY becoming a wholly owned affiliate of LAKESIDE, but continuing to exist, and presently existing, as a separate California medical corporation.. Dr. DeVore is informed and believes, and thereon alleges, that in or about November 0, LAKESIDE (including its affiliates EASTLAND and COMMUNITY) was purchased by HPN, with LAKESIDE becoming a wholly owned affiliated division of HPN, and with LAKESIDE, EASTLAND and COMMUNITY continuing to exist, and presently existing, as separate California medical corporations.. Dr. DeVore is informed and believes, and thereon alleges, that on or about October,, REGAL and LAKESIDE issued an open enrollment press release stating that the two had joined forces under the Heritage Provider network, and that they are proud to re-introduce themselves as the new and improved Regal, Lakeside and Affiliates. Dr. DeVore is further informed and believes, that in or about October, REGAL and LAKESIDE commenced doing --

4 1 1 business as, and are currently doing business under the fictitious business name, Regal, Lakeside and Affiliates. 1. In August 0, prior to HPN s purchase of LAKESIDE, the California Department of Managed Health Care ( DMHC ) conducted a routine medical survey of HPN, and on January,, publically issued its final report of that survey ( the August 0 DMHC Survey ). According to the August 0 DMHC Survey, HPN: (a) develops, organizes, and manages medical groups and independent practice associations, which it integrates with hospitals and ancillary care providers to form integrated health care systems, and (b) operates as an intermediary between nine full service health plans and seven provider medical groups. a. The August 0 DMHC Survey further identified the nine full service plans as Blue Cross of California; Blue Shield of California; Health Net of California, Inc.; Aetna Health of California; SCAN Health Plan; PacifiCare of California; Cigna HealthCare of California, Inc.; Universal Care; and Inter Valley Health Plan. However, HPN s Internet web-page currently identifies that since August 0, HPN has brought three additional full service plans within its network, namely, Easy Choice Health Plan, Molina Healthcare and Secure Horizons. b. The August 0 DMHC Survey further identified REGAL as one of the seven medical groups within the HPN provider network as of August 0. However, HPN s Internet web-page currently identifies that since August 0, it acquired two additional medical groups, bringing the total to nine medical groups within the HPN provider network, namely, Affiliated Doctors of Orange County; Bakersfield Family Medical Center; Coastal Physician Network; Desert Oasis Healthcare; High Desert Medical Group; Heritage Victor Valley Medical Group; Sierra Medical Group, REGAL, and LAKESIDE (which includes EASTLAND and COMMUNITY). c. The August 0 DMHC Survey described the relationship between HPN, the full service plans, and HPN s provider medical groups as follows: Each of the full service health plans delegate the administration of Utilization Management, Quality Management, and Credentialing to Heritage for enrollees assigned to its contracted medical groups. [HPN], in turn, delegates these Utilization Management, Quality Management, and Credentialing functions to its contracted medical groups. [HPN] then oversees the medical group s administration. --

5 1 1 All of the enrollees managed by [HPN] have benefit and coverage contracts with, and access health care benefits through, one of the nine full-service plans to which they belong; therefore, [HPN] has no actual enrollees of its own. 1. As of May 1, HPN s Internet web-site stated that [f]rom onwards, as [HPN s] network has expanded to include Southern and Central California, [HPN has] grown from 1,000 members to nearly 00,000 members, and that HPN has positioned [itself] to become one of the largest in-state health care providers. Further, according to HPN s Quarterly Financial Report filed with the DMHC, for the quarter ended December 1,, HPN managed the care of, enrollees. And, based on the number of enrollees in managed health care plans in the State of California as of March 1, 1, HPN was ranked by industry consultant Cattaneo & Stroud, Inc. as the fourth largest managed care organization in California. Further, as of May 1, the webpage on HPN s web-site devoted to REGAL touted that (w)ith a network spanning more than,000 square miles and thousands of health care providers, Regal Medical Group is part of one of Southern California s largest managed health networks. Moreover, HPN s web-site has a link to REGAL s internet web-site which describes how an individual may become a member of REGAL, and thus a member of the HPN network, as follows: How to Enroll with Regal Medical Group The process for enrolling with Regal Medical Group is easy! Choose Regal during new enrollment, or open enrollment periods If you re joining a new insurance plan, or participating in your employer s annual open enrollment period, you only need to list, or select, Regal Medical Group as your preferred medical group on the enrollment form. You ll also need to put down the name of your chosen Primary Care Physician at this time. Make the switch to Regal at any other time You don t have to wait for special enrollment periods to join the Regal Medical Family. You can do it at any time. To change your preferred medical group, just call the customer service number listed on the back of your insurance card. Your health plan s customer service department can help you to select Regal as your medical group, and they can help you find a Regal affiliated Primary Care Physician if you haven t already selected one.. Based on the foregoing, HPN yields significant power in the overall California health care market, and through its affiliated companies such as REGAL and LAKESIDE (including EASTLAND and COMMUNITY), HPN controls the administration of the health care needs of nearly 00,000 individuals. As noted in the August 0 DMHC Survey, the health plans within the --

6 1 1 HPN network delegate to HPN, the administration of Utilization Management, Quality Management, and Credentialing for enrollees assigned to the medical groups within the HPN network. In turn, HPN delegates those functions to its member medical groups, including REGAL and LAKESIDE, which have now joined forces under the HPN network as Regal, Lakeside and Affiliates. Thus, as affiliated divisions of HPN, and members of the HPN network, REGAL and LAKESIDE (including EASTLAND and COMMUNITY) also have significant power in the California health care market, including the Los Angeles County region where Dr. DeVore engages in the practice of fetal & maternal medicine and obstetrics & gynecology. The Relationship Between Dr. DeVore and REGAL, LAKESIDE, EASTLAND and COMMUNITY. Like almost all doctors in this age of managed health care, Dr. DeVore has found that most of his patients have medical benefits coverage that requires them to receive medical care and treatment only from physicians who are contracted with the patient s insurance company, health care service plan, or healthcare service organization, and that he therefore cannot treat or obtain referrals of such patients unless he is contracted as a participating physician or participating provider with such healthcare entities. Indeed, once an enrollee in any of the full service plans contracted with HPN selects one of the medical groups within the HPN network as their preferred medical group, only physicians under contract with the HPN-affiliated medical group may provide covered services to the enrollee.. At all relevant times herein, Dr. DeVore, as well as many other physicians, have entered into standard form provider contracts for the provision of medical services to the enrollees administered by HPN through its affiliated companies REGAL and LAKESIDE (including EASTLAND and COMMUNITY). More specifically: a. On March, 00, Dr. DeVore and REGAL entered into a Provider Agreement with a back-dated initial -year term commencing on July 1,, and which was automatically renewed thereafter for successive terms through June 0, 1 ( the REGAL Contract ); /// --

7 1 1 b. On October 1, 0, Dr. Devore and EASTLAND entered into a Specialist Provider Agreement which was automatically renewed for successive terms through October 1, 1 ( the EASTLAND Contract ); c. On January 0, 0, Dr. DeVore and COMMUNITY entered into a Fee-For- Service Specialist Agreement which was automatically renewed for successive terms through January 0, 1 ( the COMMUNITY Contract ); and d. On February 1, 0, Dr. DeVore and LAKESIDE entered into a Specialty Care Group Agreement which was automatically renewed for successive terms through February 1, 1 ( the LAKESIDE Contract ).. As affiliated divisions of HPN, the fourth largest private health care service plan in California, REGAL and LAKESIDE (including EASTLAND and COMMUNITY) yield substantial power over the ability of individual physicians, such as Dr. DeVore, to pursue the practice of medicine in Southern California, in that the denial of access to the enrollees controlled by HPN through REGAL, LAKESIDE, EASTLAND and COMMUNITY would significantly impair the ability of such physicians to practice medicine or a medical specialty in Southern California. Therefore, like HPN, at all relevant times herein mentioned, REGAL, LAKESIDE, EASTLAND and COMMUNITY also controlled important economic interests of Dr. DeVore, and had obtained quasi-public significance, in that it was economically necessary for Dr. DeVore to contract as a participating provider with REGAL, LAKESIDE, EASTLAND and COMMUNITY to gain access to the enrollees controlled by HPN through those HPN-network medical groups. The Termination of the REGAL, LAKESIDE, EASTLAND and COMMUNITY Contracts. Despite the fact that Dr. DeVore met all of REGAL s eligibility criteria and had previously been a participating provider for REGAL for over thirteen years, in a January, 1 letter from Regal, Lakeside and Affiliates (the dba of REGAL and LAKESIDE), Dr. DeVore was advised that the REGAL Contract was being terminated effective May, 1, pursuant to the Termination Without Cause provision of that contract. A true and correct copy of the January, 1 termination letter is attached hereto as Exhibit 1. /// --

8 1 1. In response to the January, 1 termination letter, Dr. DeVore contacted Regal, Lakeside and Affiliates James Ingaglio in an attempt to determine the basis for the termination, if any, and to discuss the reinstatement of Dr. DeVore s contract and his status as participating provider for REGAL. In response, Dr. Ingaglio confided to Dr. DeVore that Regal, Lakeside and Affiliates was decreasing its number of approved medical specialists providing Obstetrics care to its enrollees, such as Dr. DeVore, and consolidating that care under a lesser number of medical specialists. Dr. Ingaglio further confided to Dr. DeVore that the motive for taking such action was to discourage enrollees from utilizing such medical specialty services by increasing the patient wait time to receive such services. Dr. DeVore responded to Dr. Ingaglio by indicating his belief that the termination of his contract was improper, and that he contested the termination. In response, Dr. Ingaglio suggested to Dr. DeVore that perhaps the matter could be resolved informally, and requested Dr. DeVore to have his legal counsel contact Jonathan Gluck (legal counsel for HPN, REGAL and LAKESIDE). However, on January, 1, Mr. Gluck stated to Dr. DeVore s legal counsel, in no uncertain terms, that no reason was required for the termination of Dr. DeVore s contract, and that the termination decision would not be reconsidered.. The January, 1 termination letter made reference only to the termination of the REGAL Contract. However, because the January, 1 termination letter was mailed on the letterhead of Regal, Lakeside and Affiliates, on March, 1, Dr. DeVore had a member of his staff contact Dr. Ingaglio to determine whether the letter intended to terminate the LAKESIDE and EASTLAND Contracts as well. Dr. Ingaglio responded I believe so, but that he would get back to Dr. DeVore s staff member or send a revised termination letter.. Thereafter, Dr. DeVore received three additional letters dated March, 1 on the letterhead of Regal, Lakeside and Affiliates, giving notice of: (1) the termination without cause of the LAKESIDE Contract effective May, 1; () the termination without cause of the EASTLAND Contract effective June, 1; and () the termination without cause of the COMMUNITY Contract effective May, 1. True and correct copies of those March, 1 termination letters are attached hereto as Exhibit, Exhibit and Exhibit, respectively. /// --

9 1 1. Dr. DeVore is informed and believes, and thereon alleges, that the terminations of the LAKESIDE, EASTLAND and COMMUNITY Contracts were for same improper reason previously communicated by Dr. Ingaglio to Dr. DeVore with respect to the termination of the REGAL Contract as alleged in paragraph above.. Further, Dr. DeVore is informed and believes, and thereon alleges, that the termination of all of his contracts with the HPN-network medical groups was orchestrated by HPN based on the improper economic credentialing of Dr. DeVore, and that HPN intentionally interfered with Dr. DeVore s contracts and business relationships with REGAL, LAKESIDE, EASTLAND and COMMUNITY. The Distinction Between Economic Credentialing and Economic Profiling. Economic profiling is any evaluation of a particular physician, provider, medical group, or individual practice association based in whole or in part on the economic costs or utilization of services associated with medical care provided or authorized by the physician, provider, medical group, or individual practice association. Health & Safety Code 1.0(d). Pursuant to Health & Safety Code 1.0(a), every health care service plan shall file with the [DMHC] a description of any policies and procedures related to economic profiling utilized by the plan and its medical groups and individual practice associations, which shall (1) describe how these policies and procedures are used in utilization review, peer review, incentive and penalty programs, and in provider retention and termination decisions, and () indicate in what manner, if any, the economic profiling system being used takes into consideration risk adjustments that reflect case mix, type and severity of patient illness, age of patients, and other enrollee characteristics that may account for higher or lower than expected costs or utilization of services. Further, Health & Safety Code 1.0(a) provides that every health care service plan shall indicate how the economic profiling activities avoid being in conflict with [Health & Safety Code 1(g)] Health & Safety Code 1(g) provides that the plan shall be able to demonstrate to the [DMHC] that medical decisions are rendered by qualified medical providers, unhindered by fiscal and administrative management. Therefore, any plan which engages in economic profiling must be able to demonstrate that its physician profiling does not have any impact the physician s medical --

10 1 1 decisions. As a result, the profiling of a physician based on economic criteria alone would be improper because such profiling would place the physician in the untenable position of having to sacrifice his medical judgment and the needs of his patients (in order to keep his utilization statistics low), or risk being de-selected as a participating provider because his average per-patient treatment costs are deemed to be too high. Thus, the economic profiling of a physician which results in the deselection of the physician as a participating provider would be improper if based on criteria unrelated to the physician s medical care decisions. Such improper economic profiling has become known as economic credentialing. follows:. The American College of Medical Quality defines economic credentialing as Economic credentialing defines a health care professional s qualifications based solely on economic factors that are unrelated to the individual s ability to make standard of care medical review or direct clinical care decisions. It involves the use of economic criteria by a health care organization as the only factor which determines a physician s or other health care professional s qualifications for initiation, continuation, or revocation of medical care or peer review privileges. As such, economic credentialing impedes the professional s role as the patient s advocate, represents an inappropriate basis for credentialing, and is considered professionally unacceptable. Credentialing must be the exclusive product of qualified and objective peer review, utilizing criteria directly related to the quality of patient care in which neither overnor under-utilization of medical resources is accepted. The decision-making process of peer review must be objective and unbiased, consistent with the standard of care in medical decision-making, and not unreasonable, capricious, or arbitrary; it must have dated, detailed documentation and be legally and clinically justifiable, performed in good faith, and equally applied to all. In cases of adverse peer review decisions, avenues of appeals utilizing due process and the inclusion of recorded fair hearings before a panel of objective peers must be available to all physicians or health care professionals being credentialed. The Termination of the REGAL, LAKESIDE, EASTLAND and COMMUNITY Contracts Was Wrongfully Induced By HPN, and was Improperly Motivated and Based On Improper Economic Credentialing. Dr. DeVore is a fetal & maternal medicine specialist. As such Dr. DeVore s patients require a high level of care and have a high cost profile which cannot be readily quantified and compared to other doctors in his field of medicine. /// --

11 1 1. Despite his qualifications, expertise and excellent quality of care record with respect to the treatment of his patients, Dr. DeVore s contracts with REGAL, LAKESIDE, EASTLAND and COMMUNITY have been terminated, purportedly without cause. However, as alleged herein above, one underlying reason for the termination of Dr. DeVore s contracts was the improper scheme and design of HPN, REGAL, LAKESIDE, EASTLAND and COMMUNITY to discourage enrollees from utilizing medical specialty services, such as those provided by Dr. DeVore, by increasing the patient wait time to receive such services.. Further, Dr. DeVore is informed and believes, and thereon alleges, that the termination of his contracts with REGAL, LAKESIDE, EASTLAND and COMMUNITY was wrongfully induced by HPN as the result of the improper economic credentialing of Dr. DeVore by HPN, REGAL, LAKESIDE, EASTLAND and COMMUNITY. More specifically, Dr. DeVore is informed and believes, and thereon alleges, that Dr. DeVore s method of providing medical care to the enrollees controlled by the Defendants rendered Dr. DeVore economically undesirable by the Defendants based on factors unrelated to his ability to make standard of care medical review or direct clinical care decisions. Dr. DeVore is further informed and believes, and thereon alleges, that the Defendants engaged in the improper economic credentialing of Dr. DeVore based on an inadequate and inferior utilization review of Dr. DeVore s treatment of enrollees controlled by the Defendants, and that such economic credentialing is contrary to law and public policy. FIRST CAUSE OF ACTION (For Intentional Interference with the REGAL and LAKESIDE Contracts Against HPN and DOES 1-). Dr. DeVore hereby incorporates by reference the allegations at paragraphs 1 through above, as if fully set forth here. 0. Defendants HPN and DOES 1-, and each of them, knew of Dr. DeVore s existing contracts and business relationships with REGAL and LAKESIDE. 1. However, despite knowing of the existence of the REGAL Contract and the existing business relationship between Dr. DeVore and REGAL, Defendants HPN and DOES 1-, and each of them, intentionally interfered with the REGAL Contract and Dr. Devore s business relationship --

12 1 1 with REGAL by inducing REGAL to terminate the REGAL Contract effective May, 1.. Further, despite knowing of the existence of the LAKESIDE Contract and the existing business relationship between Dr. DeVore and LAKESIDE, Defendants HPN and DOES 1-, and each of them, intentionally interfered with the LAKESIDE Contract and Dr. Devore s business relationship with LAKESIDE by inducing LAKESIDE to terminate the LAKESIDE Contract effective May, 1.. The exclusion of Dr. DeVore as a participating provider for both REGAL and LAKESIDE, by virtue of the terminations of the REGAL Contract and the LAKESIDE Contract, operates to preclude Dr. DeVore from providing medical care and treatment to patients: (i) who are enrollees with any one of the full service plans contracted with HPN, and (ii) who have selected either REGAL or LAKESIDE as their preferred medical group for the provision of medical services. This, in turn, interferes with, and impairs, Dr. DeVore s ability to practice medicine in the geographic areas covered by REGAL and LAKESIDE. Thus, as a direct result of the acts of Defendants HPN and DOES 1-, and each of them, Dr. DeVore has been economically damaged in an amount according to proof due to the loss of his ability to treat his existing patients and any prospective new patients: (i) who are enrollees with any one of the full service plans contracted with HPN, and (ii) who have selected either REGAL or LAKESIDE as their preferred medical group for the provision of medical services. As a further direct and foreseeable consequence of the acts of Defendants HPN and DOES 1-, and each of them, Dr. DeVore s reputation among his patients and his peers has been permanently damaged in an amount according to proof. SECOND CAUSE OF ACTION (For Intentional Interference with the EASTLAND and COMMUNITY Contracts Against HPN, REGAL, LAKESIDE and DOES -). Dr. DeVore hereby incorporates by reference the allegations at paragraphs 1 through above, as if fully set forth here.. Defendants HPN, REGAL, LAKESIDE and DOES -, and each of them, knew of Dr. DeVore s existing contracts and business relationships with EASTLAND and COMMUNITY. /// -1-

13 1 1. However, despite knowing of the existence of the EASTLAND Contract and the existing business relationship between Dr. DeVore and EASTLAND, Defendants HPN, REGAL, LAKESIDE and DOES -, and each of them, intentionally interfered with the EASTLAND Contract and Dr. Devore s business relationship with EASTLAND by inducing EASTLAND to terminate the EASTLAND Contract effective June, 1.. Further, despite knowing of the existence of the COMMUNITY Contract and the existing business relationship between Dr. DeVore and COMMUNITY, Defendants HPN, REGAL, LAKESIDE and DOES -, and each of them, intentionally interfered with the COMMUNITY Contract and Dr. Devore s business relationship with COMMUNITY by inducing COMMUNITY to terminate the COMMUNITY Contract effective May, 1.. The exclusion of Dr. DeVore as a participating provider for both EASTLAND and COMMUNITY, by virtue of the terminations of the EASTLAND Contract and the COMMUNITY Contract, operates to preclude Dr. DeVore from providing medical care and treatment to patients: (i) who are enrollees with any one of the full service plans contracted with HPN, and (ii) who have selected either EASTLAND or COMMUNITY as their preferred medical group for the provision of medical services. This, in turn, interferes with, and impairs, Dr. DeVore s ability to practice medicine in the geographic areas covered by EASTLAND and COMMUNITY. Thus, as a direct result of the acts of Defendants HPN, REGAL, LAKESIDE and DOES -, and each of them, Dr. DeVore has been economically damaged in an amount according to proof due to the loss of his ability to treat his existing patients and any prospective new patients: (i) who are enrollees with any one of the full service plans contracted with HPN, and (ii) who have selected either EASTLAND or COMMUNITY as their preferred medical group for the provision of medical services. As a further direct and foreseeable consequence of the acts of Defendants HPN and DOES 1-, and each of them, Dr. DeVore s reputation among his patients and his peers has been permanently damaged in an amount according to proof. /// /// -1-

14 1 1 THIRD CAUSE OF ACTION (For Wrongful Termination of Contract and Violation of Due Process Against REGAL). Dr. DeVore hereby incorporates by reference the allegations at paragraphs 1 through above, as if fully set forth here. 0. At all relevant times herein mentioned, REGAL controlled important economic interests of Dr. DeVore and had obtained a quasi-public significance in that it was economically necessary for Dr. DeVore to become a participating provider for REGAL in order to pursue his profession and an economically prosperous and viable medical practice. Common law rights of fair procedure and due process apply to decisions, such as the termination decision made by REGAL, that substantially affect a fundamental vested right, i.e., a physician s right to pursue a livelihood. Therefore, the provision in the REGAL Contract allowing REGAL to terminate the agreement without cause is legally unenforceable, and instead, Dr. DeVore was entitled to his common law right of fair procedure. 1. At all times herein mentioned, Dr. DeVore was ready, willing and able to perform his duties as a participating provider for REGAL, including agreeing to REGAL s contractual eligibility terms and requirements, but he has been prevented from doing so because of REGAL s arbitrary, unlawfully motivated, and unjustified termination of the REGAL Contract. REGAL s action has deprived Dr. DeVore of a vested property right without a hearing, in violation of due process of law and without fair procedure. Moreover, REGAL had no legitimate reason for terminating the REGAL Contract. Instead, REGAL s termination decision was made in fad faith and in breach of the covenant of good faith and fair dealing implied in the REGAL Contract, was arbitrary and capricious, was unlawfully motivated, and was based on factors which render the termination decision to be contrary to public policy.. More specifically, the public has a substantial interest in the relationship between health services organizations, such as REGAL, and their provider physicians, such as Dr. DeVore, and the interference with that relationship for improper or unlawful reasons constitutes a violation of public policy. As alleged herein above, the decision to terminate the REGAL Contract and Dr. --

15 1 1 DeVore s status as a participating provider of REGAL was improperly motivated. Under the scheme, the Defendants, including HPN and REGAL, are decreasing the pool of providers of medical specialty services available to enrollees seeking Obstetrics care with the admitted purpose of discouraging those enrollees from utilizing such services under their health plans. The scheme not only puts the enrollees at risk in violation of public policy, but the scheme is directly contrary to the representations made by REGAL on its Internet web-page that REGAL is committed to providing quality care to our members, and that REGAL does not encourage inappropriate underutilization of services.. Furthermore, as alleged herein above, the termination of the REGAL Contract was wrongfully induced by HPN as the result of the improper economic credentialing of Dr. DeVore. More specifically, Dr. DeVore is informed and believes, and thereon alleges, that Dr. DeVore s method of providing medical care to the enrollees controlled by the Defendants rendered Dr. DeVore economically undesirable to the Defendants, including HPN and REGAL, based on factors unrelated to his ability to make standard of care medical review or direct clinical care decisions. Dr. DeVore is further informed and believes, and thereon alleges, that the Defendants, including HPN and REGAL, engaged in the improper economic credentialing of Dr. DeVore based on an inadequate and inferior utilization review of Dr. DeVore s treatment of enrollees controlled by the Defendants, and that such economic credentialing is contrary to law and public policy. At a minimum, the improper economic credentialing of Dr. DeVore violated the sprit and intent of the legislative policies embodied in Health & Safety Code 1.0, which, among other things, requires that any physician performance measurement takes into consideration risk adjustments that reflect case mix, type and severity of patient illness, age of patients, and other enrollee characteristics that may account for higher or lower than expected cost or utilization of services, and thus is improper conduct in violation of a legislatively declared policy.. The acts of REGAL as alleged herein above, including the improper economic credentialing of Dr. DeVore, and the admitted desire of the Defendants, including HPN and REGAL, to discourage enrollees from utilizing medical specialty services, such as those provided by Dr. DeVore, as one purpose for the termination of the REGAL Contract, violate the law and public --

16 1 1 policy, including without limitation, Health & Safety Code 1(d), 1(e)(1), 1(g), 1(h)(1), and 1.0 and Code of Regulations 0..., which require health plans to provide fair and reasonable contracts to providers and enrollees, to ensure that enrollees have ready access to all covered services, and to ensure that medical decisions are rendered by qualified medical providers unhindered by fiscal and administrative pressures.. As a direct result of REGAL s above-alleged conduct, Dr. DeVore has been denied a valuable property right and economic interest, and has suffered, and will continue to suffer economic lost income damages in an amount according to proof. Further, REGAL s conduct has damaged Dr. DeVore s reputation among his patients and his peers, causing substantial injury, in an amount according to proof. FOURTH CAUSE OF ACTION (For Wrongful Termination of Contract and Violation of Due Process Against LAKESIDE). Dr. DeVore hereby incorporates by reference the allegations at paragraphs 1 through above, as if fully set forth here.. At all relevant times herein mentioned, LAKESIDE controlled important economic interests of Dr. DeVore and had obtained a quasi-public significance in that it was economically necessary for Dr. DeVore to become a participating provider for LAKESIDE in order to pursue his profession and an economically prosperous and viable medical practice. Common law rights of fair procedure and due process apply to decisions, such as the termination decision made by LAKESIDE, that substantially affect a fundamental vested right, i.e., a physician s right to pursue a livelihood. Therefore, the provision in the LAKESIDE Contract allowing LAKESIDE to terminate the agreement without cause is legally unenforceable, and instead, Dr. DeVore was entitled to his common law right of fair procedure.. At all times herein mentioned, Dr. DeVore was ready, willing and able to perform his duties as a participating provider for LAKESIDE, including agreeing to LAKESIDE s contractual eligibility terms and requirements, but he has been prevented from doing so because of LAKESIDE s arbitrary, unlawfully motivated, and unjustified termination of the LAKESIDE --

17 1 1 Contract. LAKESIDE s action has deprived Dr. DeVore of a vested property right without a hearing, in violation of due process of law and without fair procedure. Moreover, LAKESIDE had no legitimate reason for terminating the LAKESIDE Contract. Instead, LAKESIDE s termination decision was made in fad faith and in breach of the covenant of good faith and fair dealing implied in the LAKESIDE Contract, was arbitrary and capricious, was unlawfully motivated, and was based on factors which render the termination decision to be contrary to public policy.. More specifically, the public has a substantial interest in the relationship between health services organizations, such as LAKESIDE, and their provider physicians, such as Dr. DeVore, and the interference with that relationship for improper or unlawful reasons constitutes a violation of public policy. As alleged herein above, the decision to terminate the LAKESIDE Contract and Dr. DeVore s status as a participating provider of LAKESIDE was improperly motivated. Under the scheme, the Defendants, including HPN and LAKESIDE, are decreasing the pool of providers of medical specialty services available to enrollees seeking Obstetrics care with the admitted purpose of discouraging those enrollees from utilizing such services under their health plans. 0. Furthermore, as alleged herein above, the termination of the LAKESIDE Contract was wrongfully induced by HPN as the result of the improper economic credentialing of Dr. DeVore. More specifically, Dr. DeVore is informed and believes, and thereon alleges, that Dr. DeVore s method of providing medical care to the enrollees controlled by the Defendants rendered Dr. DeVore economically undesirable to the Defendants, including HPN and LAKESIDE, based on factors unrelated to his ability to make standard of care medical review or direct clinical care decisions. Dr. DeVore is further informed and believes, and thereon alleges, that the Defendants, including HPN and LAKESIDE, engaged in the improper economic credentialing of Dr. DeVore based on an inadequate and inferior utilization review of Dr. DeVore s treatment of enrollees controlled by the Defendants, and that such economic credentialing is contrary to law and public policy. At a minimum, the improper economic credentialing of Dr. DeVore violated the sprit and intent of the legislative policies embodied in Health & Safety Code 1.0, which, among other things, requires that any physician performance measurement takes into consideration risk --

18 1 1 adjustments that reflect case mix, type and severity of patient illness, age of patients, and other enrollee characteristics that may account for higher or lower than expected cost or utilization of services, and thus is improper conduct in violation of a legislatively declared policy. 1. The acts of LAKESIDE as alleged herein above, including the improper economic credentialing of Dr. DeVore, and the admitted desire of the Defendants, including HPN and LAKESIDE, to discourage enrollees from utilizing medical specialty services, such as those provided by Dr. DeVore, as one purpose for the termination of the LAKESIDE Contract, violate the law and public policy, including without limitation, Health & Safety Code 1(d), 1(e)(1), 1(g), 1(h)(1), and 1.0 and Code of Regulations 0..., which require health plans to provide fair and reasonable contracts to providers and enrollees, to ensure that enrollees have ready access to all covered services, and to ensure that medical decisions are rendered by qualified medical providers unhindered by fiscal and administrative pressures.. As a direct result of LAKESIDE s above-alleged conduct, Dr. DeVore has been denied a valuable property right and economic interest, and has suffered, and will continue to suffer economic lost income damages in an amount according to proof. Further, LAKESIDE s conduct has damaged Dr. DeVore s reputation among his patients and his peers, causing substantial injury, in an amount according to proof. FIFTH CAUSE OF ACTION (For Wrongful Termination of Contract and Violation of Due Process Against EASTLAND). Dr. DeVore hereby incorporates by reference the allegations at paragraphs 1 through above, as if fully set forth here.. At all relevant times herein mentioned, EASTLAND controlled important economic interests of Dr. DeVore and had obtained a quasi-public significance in that it was economically necessary for Dr. DeVore to become a participating provider for EASTLAND in order to pursue his profession and an economically prosperous and viable medical practice. Common law rights of fair procedure and due process apply to decisions, such as the termination decision made by EASTLAND, that substantially affect a fundamental vested right, i.e., a physician s right to pursue a --

19 1 1 livelihood. Therefore, the provision in the EASTLAND Contract allowing EASTLAND to terminate the agreement without cause is legally unenforceable, and instead, Dr. DeVore was entitled to his common law right of fair procedure.. At all times herein mentioned, Dr. DeVore was ready, willing and able to perform his duties as a participating provider for EASTLAND, including agreeing to EASTLAND s contractual eligibility terms and requirements, but he has been prevented from doing so because of EASTLAND s arbitrary, unlawfully motivated, and unjustified termination of the EASTLAND Contract. EASTLAND s action has deprived Dr. DeVore of a vested property right without a hearing, in violation of due process of law and without fair procedure. Moreover, EASTLAND had no legitimate reason for terminating the EASTLAND Contract. Instead, EASTLAND s termination decision was made in fad faith and in breach of the covenant of good faith and fair dealing implied in the EASTLAND Contract, was arbitrary and capricious, was unlawfully motivated, and was based on factors which render the termination decision to be contrary to public policy.. More specifically, the public has a substantial interest in the relationship between health services organizations, such as EASTLAND, and their provider physicians, such as Dr. DeVore, and the interference with that relationship for improper or unlawful reasons constitutes a violation of public policy. As alleged herein above, the decision to terminate the EASTLAND Contract and Dr. DeVore s status as a participating provider of EASTLAND was improperly motivated. Under the scheme, the Defendants, including HPN and EASTLAND, are decreasing the pool of providers of medical specialty services available to enrollees seeking Obstetrics care with the admitted purpose of discouraging those enrollees from utilizing such services under their health plans.. Furthermore, as alleged herein above, the termination of the EASTLAND Contract was wrongfully induced by HPN, REGAL and LAKESIDE as the result of the improper economic credentialing of Dr. DeVore. More specifically, Dr. DeVore is informed and believes, and thereon alleges, that Dr. DeVore s method of providing medical care to the enrollees controlled by the Defendants rendered Dr. DeVore economically undesirable to the Defendants, including HPN, REGAL, LAKESIDE and EASTLAND, based on factors unrelated to his ability to make standard of --

20 1 1 care medical review or direct clinical care decisions. Dr. DeVore is further informed and believes, and thereon alleges, that the Defendants, including HPN, REGAL, LAKESIDE and EASTLAND, engaged in the improper economic credentialing of Dr. DeVore based on an inadequate and inferior utilization review of Dr. DeVore s treatment of enrollees controlled by the Defendants, and that such economic credentialing is contrary to law and public policy. At a minimum, the improper economic credentialing of Dr. DeVore violated the sprit and intent of the legislative policies embodied in Health & Safety Code 1.0, which, among other things, requires that any physician performance measurement takes into consideration risk adjustments that reflect case mix, type and severity of patient illness, age of patients, and other enrollee characteristics that may account for higher or lower than expected cost or utilization of services, and thus is improper conduct in violation of a legislatively declared policy.. The acts of EASTLAND as alleged herein above, including the improper economic credentialing of Dr. DeVore, and the admitted desire of the Defendants, including HPN and EASTLAND, to discourage enrollees from utilizing medical specialty services, such as those provided by Dr. DeVore, as one purpose for the termination of the EASTLAND Contract, violate the law and public policy, including without limitation, Health & Safety Code 1(d), 1(e)(1), 1(g), 1(h)(1), and 1.0 and Code of Regulations 0..., which require health plans to provide fair and reasonable contracts to providers and enrollees, to ensure that enrollees have ready access to all covered services, and to ensure that medical decisions are rendered by qualified medical providers unhindered by fiscal and administrative pressures.. As a direct result of EASTLAND s above-alleged conduct, Dr. DeVore has been denied a valuable property right and economic interest, and has suffered, and will continue to suffer economic lost income damages in an amount according to proof. Further, EASTLAND s conduct has damaged Dr. DeVore s reputation among his patients and his peers, causing substantial injury, in an amount according to proof. /// /// --

21 1 1 SIXTH CAUSE OF ACTION (For Wrongful Termination of Contract and Violation of Due Process Against COMMUNITY) 0. Dr. DeVore hereby incorporates by reference the allegations at paragraphs 1 through above, as if fully set forth here. 1. At all relevant times herein mentioned, COMMUNITY controlled important economic interests of Dr. DeVore and had obtained a quasi-public significance in that it was economically necessary for Dr. DeVore to become a participating provider for COMMUNITY in order to pursue his profession and an economically prosperous and viable medical practice. Common law rights of fair procedure and due process apply to decisions, such as the termination decision made by COMMUNITY, that substantially affect a fundamental vested right, i.e., a physician s right to pursue a livelihood. Therefore, the provision in the COMMUNITY Contract allowing COMMUNITY to terminate the agreement without cause is legally unenforceable, and instead, Dr. DeVore was entitled to his common law right of fair procedure.. At all times herein mentioned, Dr. DeVore was ready, willing and able to perform his duties as a participating provider for COMMUNITY, including agreeing to COMMUNITY s contractual eligibility terms and requirements, but he has been prevented from doing so because of COMMUNITY s arbitrary, unlawfully motivated, and unjustified termination of the COMMUNITY Contract. COMMUNITY s action has deprived Dr. DeVore of a vested property right without a hearing, in violation of due process of law and without fair procedure. Moreover, COMMUNITY had no legitimate reason for terminating the COMMUNITY Contract. Instead, COMMUNITY s termination decision was made in fad faith and in breach of the covenant of good faith and fair dealing implied in the COMMUNITY Contract, was arbitrary and capricious, was unlawfully motivated, and was based on factors which render the termination decision to be contrary to public policy.. More specifically, the public has a substantial interest in the relationship between health services organizations, such as COMMUNITY, and their provider physicians, such as Dr. DeVore, and the interference with that relationship for improper or unlawful reasons constitutes a --

22 1 1 violation of public policy. As alleged herein above, the decision to terminate the COMMUNITY Contract and Dr. DeVore s status as a participating provider of COMMUNITY was improperly motivated. Under the scheme, the Defendants, including HPN and COMMUNITY, are decreasing the pool of providers of medical specialty services available to enrollees seeking Obstetrics care with the admitted purpose of discouraging those enrollees from utilizing such services under their health plans.. Furthermore, as alleged herein above, the termination of the COMMUNITY Contract was wrongfully induced by HPN, REGAL and LAKESIDE as the result of the improper economic credentialing of Dr. DeVore. More specifically, Dr. DeVore is informed and believes, and thereon alleges, that Dr. DeVore s method of providing medical care to the enrollees controlled by the Defendants rendered Dr. DeVore economically undesirable to the Defendants, including HPN, REGAL, LAKESIDE and COMMUNITY, based on factors unrelated to his ability to make standard of care medical review or direct clinical care decisions. Dr. DeVore is further informed and believes, and thereon alleges, that the Defendants, including HPN, REGAL, LAKESIDE and COMMUNITY, engaged in the improper economic credentialing of Dr. DeVore based on an inadequate and inferior utilization review of Dr. DeVore s treatment of enrollees controlled by the Defendants, and that such economic credentialing is contrary to law and public policy. At a minimum, the improper economic credentialing of Dr. DeVore violated the sprit and intent of the legislative policies embodied in Health & Safety Code 1.0, which, among other things, requires that any physician performance measurement takes into consideration risk adjustments that reflect case mix, type and severity of patient illness, age of patients, and other enrollee characteristics that may account for higher or lower than expected cost or utilization of services, and thus is improper conduct in violation of a legislatively declared policy.. The acts of COMMUNITY as alleged herein above, including the improper economic credentialing of Dr. DeVore, and the admitted desire of the Defendants, including HPN and COMMUNITY, to discourage enrollees from utilizing medical specialty services, such as those provided by Dr. DeVore, as one purpose for the termination of the COMMUNITY Contract, violate the law and public policy, including without limitation, Health & Safety Code 1(d), --

23 1 1 1(e)(1), 1(g), 1(h)(1), and 1.0 and Code of Regulations 0..., which require health plans to provide fair and reasonable contracts to providers and enrollees, to ensure that enrollees have ready access to all covered services, and to ensure that medical decisions are rendered by qualified medical providers unhindered by fiscal and administrative pressures.. As a direct result of COMMUNITY s above-alleged conduct, Dr. DeVore has been denied a valuable property right and economic interest, and has suffered, and will continue to suffer economic lost income damages in an amount according to proof. Further, COMMUNITY s conduct has damaged Dr. DeVore s reputation among his patients and his peers, causing substantial injury, in an amount according to proof. SEVENTH CAUSE OF ACTION (For Unlawful, Unfair, and Fraudulent Business Practices in Violation of California Business & Professions Code 0, et seq. Against HPN, REGAL, LAKESIDE, COMMUNITY and EASTLAND). Dr. DeVore hereby incorporates by reference the allegations at paragraphs 1 through above, as if fully set forth here.. The Unfair Competition Law, California Business and Professions Code 0, et seq., defines unfair competition to include any unfair, unlawful, or fraudulent business act or practice.. Defendants violated, and continue to violate, California Business and Professions Code 0, et seq., by and through the improper economic credentialing of Dr. DeVore based on an inadequate and inferior utilization review of Dr. DeVore s treatment of enrollees controlled by the Defendants. At a minimum, the improper economic credentialing of Dr. DeVore violated the sprit and intent of the legislative policies embodied in Health & Safety Code 1.0, which, among other things, requires that any physician performance measurement takes into consideration risk adjustments that reflect case mix, type and severity of patient illness, age of patients, and other enrollee characteristics that may account for higher or lower than expected cost or utilization of services, and thus is improper conduct in violation of a legislatively declared policy. /// --