Justices to rule on HMOs;

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The San Francisco Chronicle

Justices to rule on HMOs;

Supreme Court takes on suits over denial of coverage

by Victoria Colliver, Chronicle Staff Writer
November 4, 2003

The U.S. Supreme Court agreed Monday to settle the issue of whether patients can sue their HMOs for denying treatment that their doctors recommended.

The court will hear two appeals, one from a Texas woman who suffered complications after her insurer would only pay for one day in the hospital after her hysterectomy. The other case involves a Texas man who was required to take a cheaper drug that caused bleeding ulcers.

The court's decision could determine whether patients could receive hefty damages from insurers that fail to pay for beneficial or lifesaving treatment. The ruling could have a direct impact on California, one of the 13 states, along with Texas, that give patients the right to sue their health maintenance organization.

Laws passed in 1999 have given California some of the strongest protections in the country. Congress has tried but failed to pass national patients-rights bills.

Insurers behind the appeals before the Supreme Court claim a 1974 federal law that governs employee benefit plans trumps state patient-protection laws or laws that allow medical negligence suits. Consumer advocates in California fear a Supreme Court decision in favor of the HMOs would weaken the state's protections.

"Californians have the right to sue an HMO without caps on the amounts. That goes right to the heart of our patients' bill of rights," said Daniel Zingale, cabinet secretary for Gov. Gray Davis and former head of the state's Ddepartment of Managed Health Care.

In California, it's unclear how many people have sued their HMOs because most plans require mandatory arbitration to resolve problems and those cases are not made public. But officials from both sides agreed the right to sue, which went into effect in 2001, has resulted in a handful, not a flood, of lawsuits.

That's partly because California has an independent medical review process designed to resolve problems before they escalate to a lawsuit. The panel has ruled in favor of the HMOs in about 65 percent of the cases. Consumer advocates say that illustrates that HMOs only hold out on the cases they believe they will win.

Zingale said patients would rather receive proper care than end up in court. "If patients have the right to see a doctor or lawyer, they're going to pick a doctor every time," he said.

The Supreme Court will hear the case of Ruby Calad, a member of Cigna Healthcare of Texas Inc. She wound up in the emergency room after her insurer refused to cover more than one day in the hospital after her operation.

In the other case, Juan Davila, a member of Aetna Health Inc., was prescribed Vioxx for his arthritis. But after his insurer would only approve a cheaper pain medication, he suffered from bleeding ulcers and almost had a heart attack.

In both cases, the insurers claimed the original lawsuit belonged in federal court because the claim could have been brought under the Employee Retirement Income Security Act, which allows for the patient to receive the benefit the plan denied but not any monetary damages.

"We think ERISA provides for a way (for somebody to seek) a remedy," said Susan Pisano, spokeswoman for the newly merged American Association of Health Plans and the Health Insurance Association of America. Pisano said the group is pleased the court will clarify the debate.

Jamie Court, president of the Foundation for Taxpayer and Consumer Rights in Santa Monica, also welcomed the Supreme Court's decision to resolve what to date has been a patchwork of inconsistent state laws and lower court rulings.

"This is basically a death row appeal for the HMOs over HMO liability laws," Court said.

Steve Tough, president of the California Association of Health Plans, said the state trade group hasn't taken a position on this national debate. But he said the state's patient rights, including the ability to sue and the review process, has led to positive change between patients and HMOs.

"California has a current position. We subscribe to it, we adhere to it and we adopt it," Tough said.
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The Associated Press contributed to this article.
E-mail Victoria Colliver at [email protected]