RIGHT-TO-SUE: Courts Leaning Toward Consumers
While Congress continues to battle over patients' rights legislation, "rulings by judges on Federal District Courts and appeals courts in recent months show that they have become more receptive to lawsuits attacking the quality of care provided by health plans," the New York Times reported this weekend. Currently, consumers with employer-sponsored health plans are barred from holding HMOs liable for denial of benefits under the Employment Retirement Income Security Act (ERISA) of 1974, which is based upon lawmakers' desire that "employers establish health and pension plans without being exposed to expensive litigation." But lawyers have found ways around "a provision of the law that allows patients to recover only the value of denied benefits, not punitive damages or compensation for lost wages or pain and suffering." In Urbana, IL, for example, a Federal District Court ruled in favor of a woman suing Health Alliance-Midwest for incorrectly diagnosing her husband's heart attack on the basis of the state's "wrongful death statute," not on denial of care. Before 1995, the Supreme Court emphasized the supremacy of ERISA over "any and all state laws" concerning employee benefit plans. But since 1995, the court has been favoring states' "historic police powers" over health insurance. Further, "state insurance commissioners recommended this month that all states establish appeal procedures for people who want to contest the denial of care by HMOs." Federal judges have also been ruling in favor of consumers in cases where the suit involved medical negligence and not claims denials, particularly when doctors function as agents of the HMO. Patients are permitted to sue HMOs for "'breach of fiduciary duty,' meaning their obligation to act in the interest of participants and beneficiaries." Professor Timothy Jost of Ohio State University said, "It's still pretty clear that you cannot directly sue a plan for denial of benefits, no matter how egregious the denial is. That protects much of what health plans do" (Pear, 8/15).
Passive Patients in Arizona
Although half of Arizona consumers' efforts to appeal denials resulted in a successful reversal, "many people still don't know they can appeal claims and services denied by health insurers, HMOs or dental and vision plans," as permitted under state law, the Arizona Daily Star reports. From July 1998 to June 1999, the law's first year, consumers appealed 1,936 denials, 946 of which "were reversed in consumers' favor by insurers, without appealing to an outside review." Consumers took 176 denials to an outside reviewer, 57 of which were reversed, 111 of which were rejected and the remainder of which are pending. Mary Butterfield of the Arizona Department of Insurance said, "It's important for people to speak up, and I think people are not always used to doing so." Geoffrey Jaroch of PacifiCare, which had seven of its 17 cases reversed, noted that department officials have not provided reasons behind the reversals, adding, "Certainly our goal would be to have none. But it's difficult when you get no feedback. It makes it difficult for us to learn, to get better, to understand." Currently, the department is investigating whether insurers are lawfully providing enrollees with information regarding their right to appeal and will begin a state audit of insurers in September. Additionally, criticism remains over insurers' freedom to choose their own external reviewers -- a provision Al Sterman, vice president of the Arizona Consumers' Council, deemed "the fox in the hen house. I really don't have any confidence if the insurance company denies a claim and then basically it becomes an in-house review process" (Brooks, 8/15).