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Tuesday, June 22, 2004
Supreme Court protects HMOs
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The U.S. Supreme Court struck down a key provision of Maine's "Patients Bill of Rights" Monday when it ruled that people cannot sue their HMOs in state courts for large damages if the insurance companies refuse to pay for doctor-recommended health care. Insurance-industry officials said the unanimous decision was correct - that many HMOs already have internal appeals processes that allow patients to get the care they need without costly lawsuits, and that federal law provides other protections. Patient advocates, however, said those protections are limited and that the decision stripped people of an important bit of leverage that pressured insurance companies to provide adequate care. "It means that patients in effect are helpless whenever their HMOs wrongfully deny care, even when it has tragic consequences," said Ron Pollack, executive director of Families USA, based in Washington, D.C. The decision, written by Justice Clarence Thomas, said that a 30-year-old federal law that was originally meant to protect employee benefits and pensions, and now is applied to the managed care industry, prohibits individual states from letting patients sue HMOs for damages in state courts. That law, called the Employee Retirement Income Security Act, or ERISA, was meant to provide a uniform, national regulatory regime over employee benefit plans. "Therefore, any state-law cause of action that duplicates, supplements or supplants the ERISA civil enforcement remedy conflicts with the clear congressional intent to make the ERISA remedy exclusive and is therefore preempted," Thomas wrote. Under ERISA, patients can sue, but only for the amount of money it would have cost the insurance companies to provide the coverage the patients should have received. In other words, if an HMO declined to pay for a $1,000 procedure, a patient can sue in federal court and receive $1,000 - not additional damages such as punitive damages. In 2000, Maine lawmakers passed a law that allows patients to sue for as much as $400,000 in damages over wrongful denial of care. The thinking was, if insurance companies knew they would be liable for $400,000 if they improperly denied care, the companies would be more likely to pay for proper care. Nine other states have similar laws. State House Majority Leader John Richardson, a Democrat from Brunswick and a chief architect of Maine's "Patients Bill of Rights," said Monday that while the lawsuit portion of Maine's law is no longer valid, "there's a lot there that still remains." "It's not that the Patients Bill of Rights is dead in Maine," he said. "It is that one small but significant piece has now been ruled to be superceded by the ERISA laws." Monday's decision stems from two cases in Texas, in which two patients claimed their HMOs hurt them by refusing to pay for particular treatments. They sued under the Texas version of the "Patients Bill of Rights," the Texas Health Care Liability Act. In one suit, a man named Juan Davila was prescribed Vioxx for his arthritis pain. His HMO, Aetna Health Inc., refused to pay and offered instead the less expensive drug Naprosyn. Davila suffered a severe reaction from the medicine. In the other, a woman named Ruby Calad sued Cigna HealthCare of Texas after it refused to extend her one-day hospital stay after a hysterectomy, even though her surgeon had requested she be permitted to stay. She became ill and was readmitted several days later. Thomas' decision said that Davila and Calad "could have paid for the treatment themselves and then sought reimbursement" or gone to federal court for a preliminary injunction, forcing the HMOs to provide the care. But Pollack, of Families USA, said patients generally don't have the money to do such things, especially when they are sick. "If somebody has one of the more serious illnesses and expensive tests are being denied or surgery is being denied, most people will not have the capacity to front that money, and as a result, the decision by the HMO in effect is a decision that will deny care to that individual," he said. In a written statement Monday, Cigna said that ERISA "has for many years helped to ensure that participants in health benefit plans have numerous protections, including access to quick resolution of any coverage disputes through internal and external appeals processes. By providing consistent standards for the administration of health plans, ERISA also has helped employers provide health care benefits for their employees at a reasonable cost." Karen Ignagni, president and chief executive officer of America's Health Insurance Plans, released a statement saying that "there is already far too great a reliance on using the courts to resolve disputes in health care, a practice that has had great consequences for the fabric of our health care system." Chuck Dow, a spokesman for Maine's attorney general, said officials in the state are studying the decision to determine what it will mean here. The other states with "Patients Bills of Rights" are Arizona, California, Georgia, New Jersey, North Carolina, Oklahoma, Washington and West Virginia. Staff Writer Joshua L. Weinstein can be contacted at 791-6368 or at: jweinstein@pressherald.com
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