HMO LAWSUITS: ‘Powerful’ Attorneys Prepare for Action
"Some of the country's most powerful plaintiff's attorneys," known for tobacco and technology litigation, are turning their attention to the managed care industry -- "preparing a new wave of class-action lawsuits intended to escalate pressure on major HMOs to treat patients more generously or risk massive court judgments." For HMOs, this is not good news, as the Wall Street Journal points out that managed-care companies already face numerous lawsuits claiming medical malpractice or denial of benefits, and the House is scheduled to take up patients' right-to-sue legislation next week.
Bringing Out the Big Guns
Attorney Richard Scruggs, best known for "engineer[ing] the legal assault on the tobacco industry that produced settlements nationwide worth $246 billion," has teamed up with several other law firms to bring a number of state and national class action suits against "some of the nation's biggest HMOs." Hiram Eastland, who is working with Scruggs, said that although many "HMOs are involved in a con game," the lawsuit's intent is not to destroy them, but rather to "change the way patients and physicians are treated." In a separate case, attorney David Boies, known for leading the Justice Department's assault against Microsoft, is filing a suit against an unnamed company alleging "that customer's premiums exceeded the actual cost of care." The Journal reports that Boies will file the suit either in Florida, Texas or Illinois, depending on where the company is most active. Additionally, Russ Herman, another tobacco litigator who won Louisiana a $4.6 billion settlement, will file "seven class action suits on behalf of thousands of personal-injury claimants who belong to HMOs in a half-dozen states."
Insurers Fire Back
Chip Kahn, president of the Health Insurance Association of America, said, "The entrepreneurial trial attorneys are barking up the wrong tree. They are going to hurt the consumer, not help him, by crippling health plans' efforts to improve quality of care and keep insurance affordable." Adding that the proposed legal action "underscores problems with right-to-sue proposals" being debated by the House, American Association of Health Plans President Karen Ignagni said, "This makes it very clear that the winners in any new liability legislation will be the trial lawyers. The losers will be working families and businesses." Also at issue, the Journal notes, is "whether HMOs can be sued on the theory that they have breached a 'fiduciary duty,' derived from their contract with plan members, to protect patients' interests above all others" (McGinley/Geyelin, 9/30).