Court limits HMO suits over care denial

/ Source: The Associated Press

The Supreme Court said Monday that patients who claim their HMOs wouldn't pay for recommended medical care cannot sue for big malpractice damages, removing a weapon that trial lawyers and patient rights advocates said was crucial to keep the insurers honest.

The court was unanimous in saying that two HMO patients in Texas cannot pursue big malpractice or negligence cases against their insurers in state court, as they claimed a Texas patient protection law allowed them to do.

The case involves an issue that has stymied Congress, which has tried and failed to pass national patients' rights legislation. Some states have passed their own patient protection laws in the meantime, but the scope of protection varies.

The biggest question unresolved until Monday was whether patients could seek hefty damage awards in state courts, or whether they are limited only to federal courts, as insurers claimed.

The choice is significant, because state court juries can often be generous to sympathetic victims. Insurers have claimed that patients could only go to federal court, and then only to recover the value of whatever benefit the HMO denied.

The ruling weakens the Texas patient protection law and those of other states.

Ruling based on 30-year-old federal law
The court based its ruling on the language of a 30-year-old federal law, originally meant to protect employee pensions and other benefits, but now applied to the managed care industry.

The law, the Employee Retirement Income Security Act or ERISA, forces the HMO patients at issue in the case to sue only in federal courts, Justice Clarence Thomas wrote for the court.

The insurance industry had argued that ERISA trumps state patient protection laws or other state laws that allow medical negligence suits in local courts, and lower courts were divided on the issue.

The case concerns a gray area of medicine and insurance, in which decisions about what treatment to pursue and what coverage to offer are mingled. The situation arises frequently in managed care, where doctors belong to a closed network of providers overseen by administrators who may not be doctors but who nonetheless decide what the company will pay for.

The court ruled against a hysterectomy patient, Ruby Calad, who had claimed that Cigna Healthcare of Texas essentially evicted her from a Houston hospital after only one day of recovery.

The HMO would not pay for a longer stay, even though her doctor recommended it.

Complications set in after discharge
She was back in the hospital a few days later, suffering complications she claims could have been avoided had she remained hospitalized longer after surgery. She later went to court, seeking to make the HMO pay a price for what she called negligent care.

The Supreme Court did not decide whether Calad deserved better — only whether and where she could bring her lawsuit.

Trial lawyers, patient rights advocates and others had argued that HMOs need the threat of hefty jury awards to keep them honest.

Health insurers, backed by the Chamber of Commerce and others, argued that lawsuits drive up the cost of health care for everyone, and HMOs must draw the line somewhere.

In the Calad case and a companion one involving post-polio patient Juan Davila, insurers tried to pull their lawsuits out of state court and then sought to have the complaints dismissed in federal court.

Davila took what he claims was inferior but cheaper pain medication, instead of the Vioxx his doctor had recommended, because his Aetna Health plan would not pay for the more expensive drug right away.

The cheaper medication caused bleeding ulcers, and he almost had a heart attack, Davila said.

HMOs an increasingly popular option
Employers provide most private health insurance to American workers, and HMOs or other managed care options are increasingly popular choices as health care costs rise.

Texas and nine other states regulate HMOs, making decisions about whether treatment is medically necessary, state attorneys general backing Calad and Davila argued in a friend of the court brief. Other states have passed some form of consumer protection from HMO decisions, and still more states are considering such laws, the state lawyers wrote.

Arizona, California, Georgia, Louisiana, Maine, New Jersey, Oklahoma, Washington and West Virginia have laws similar to Texas’s.

The cases are Aetna Health Inc. v. Davila, 02-1845 and Cigna Healthcare of Texas Inc. v. Calad, 03-83.