News CoverageLos Angeles Times
Patients' Right to Sue HMOs Before High Court;
The White House wants a Texas healthcare law, signed by then-Gov. Bush, to be voided.
by David G. Savage, Times Staff Writer
Mar 24, 2004
WASHINGTON -- The Supreme Court took up this year's major healthcare case Tuesday in a dispute that pits the compassionate conservatism of Texas Gov. George W. Bush versus the pro-business stand of the Bush administration.
At issue is whether patients who are denied needed medical care can sue insurance companies and health maintenance organizations.
In 1997, then-Gov. Bush signed into law the Texas Health Care Liability Act, the first state law that gave patients the right to sue HMOs for denying them "appropriate and medically necessary" treatment.
It was a piece of legislation he boasted about during his campaign for the presidency four years ago. "If I'm president ... people will be able to take their HMO insurance company to court. That's what I've done in Texas and that's the kind of leadership style I'll bring to Washington," he said during the final debate with Vice President Al Gore.
But during Tuesday's arguments, Bush administration lawyers joined the insurance industry in urging the high court to void the right-to-sue provision in the Texas law and to block state lawsuits against HMOs for denying benefits.
These state claims "are subject to complete preemption" by the federal law and must be dismissed, said lawyers for the U.S. solicitor general. Allowing patients to sue their HMO will increase the cost of healthcare and add an extra burden on employers, they said.
In one of two cases heard Tuesday, the Cigna insurance company told Ruby Calad of Sugar Land, Texas, that she would have to leave a hospital just one day after a complicated hysterectomy and surgical repairs. Her doctor objected, but she was discharged, only to return days later after complications arose.
She sued under the Texas law and claimed that being required to leave the hospital prematurely violated the traditional standard of care.
The court's ruling in Cigna vs. Calad and a similar case involving Aetna will not determine whether these patients win their claims. It will decide only whether they can pursue the suits in a Texas court.
The U.S. Chamber of Commerce and the health insurance industry are asking for a complete shield from lawsuits. Meanwhile, the American Medical Assn. joined patients' rights advocates and lawyers in 20 states in arguing that victims of faulty medical care should be allowed to sue.
About 72 million Americans receive healthcare through an employer-sponsored HMO or managed-care plan.
Washington lawyer Miguel A. Estrada, Bush's failed nominee to the U.S. Court of Appeals, argued the case on behalf of two major health insurers, Aetna and Cigna. He was joined by a Justice Department lawyer.
Both lawyers argued that when Congress passed a 1974 law that brought pensions and employee benefits under federal law, it had the unintended effect of voiding all state laws governing employer-sponsored health insurance.
Employers were encouraged to provide benefits, such as health insurance, but they were also protected under federal law from being sued, Estrada said. "This is about a bargain with employers," he said.
Arguing the other side, a lawyer for the two patients and a Texas state lawyer urged the justices to uphold the principle of states' rights. They said states traditionally had broad power to regulate insurance and the practice of medicine. Moreover, the suits are against the managed care plans, not the employers, they said.
"Were Aetna and Cigna to prevail, patients would be left with no meaningful remedy for negligent and wrongful decisions made by HMOs," said Texas Solicitor Gen. R. Ted Cruz in his brief to the court.
Most of the justices sounded as though they would side with the insurance firms and against Texas.
Justice Antonin Scalia said the HMOs are not making medical decisions when they refuse to pay for certain treatment. "They're not managing care. They're giving out money," he said.
Justice John Paul Stevens disagreed. Insurers are not just deciding whether to pay bills, he said. "They are making medical decisions," he said, if they tell a patient they will not pay for another day in the hospital.
A White House spokesman said Tuesday that the president's position in the HMO case is "compatible" with his position as governor. "The president's principles are for allowing patients a fair process for challenging the decisions of health insurers without needlessly driving up healthcare costs," said Trent Duffy, deputy White House press secretary.
Besides Texas, California and eight other states have enacted laws in recent years that allow patients in some instances to sue an HMO. California's law went into effect three years ago, but few lawsuits have been filed.
"There's only been a few cases. But we passed it as a hammer to hold over the heads of the HMOs," said Jamie Court, president of the Foundation for Taxpayer and Consumer Rights in Santa Monica. "If the court goes the wrong way, it will be a real setback for patients' rights."
If the court blocks state lawsuits against HMOs, it may renew the pressure in Congress to pass a national patient's bill of rights. That effort stalled three years ago, in part because President Bush -- unlike Gov. Bush -- firmly opposed allowing patients to sue for damages.
The issue of suing HMOs was featured in the third debate between Gore and Bush on Oct. 17, 2000.
When Gore said that he, unlike the governor of Texas, supported a national patient's bill of rights and allowing patients to sue HMOs, Bush objected.
"It's not true. I do support a national patient's bill of rights," he said. "As a matter of fact, I brought Republicans and Democrats together to do just that in the state of Texas to get a patient's bill of rights through. We're one of the first states that said you can sue an HMO for denying you proper coverage," he said, promising to do the same in Washington.