Supreme Court Agrees to Hear HMO Review Board Case

The Supreme Court last Friday agreed to hear in its next term a patients' rights case involving a legal issue that is addressed in the Senate-approved bill sponsored by Sens. John McCain (R-Ariz.), Edward Kennedy (D-Mass.) and John Edwards (D-N.C.), the New York Times reports. The case, Rush Prudential HMO v. Moran, will address whether states may enforce laws that call for "binding" independent review when a managed care company rejects a "proposed procedure as medically unnecessary" (Greenhouse, New York Times, 6/29). In October, the U.S. Court of Appeals in Chicago ruled against Prudential after lawyers for the HMO went to court to "challenge the review board's authority" when a patient in Illinois turned to the board seeking $95,000 in compensation for surgery she had even though the HMO had "refused to pay" for the procedure. In the case, the judge ruled that the patient was "trying to obtain" what the health plan had promised her. However, the 5th U.S. Circuit Court of Appeals in New Orleans "came to the opposite conclusion" in a case brought by health insurers in Texas, challenging the state's authority to establish such review boards. The appeals court agreed with the insurers' argument that the state "did not have the authority" to oversee HMOs because a 1974 federal pension law "shield[ed] 'employee benefit plans' from being sued." Both the Texas and the Illinois cases were appealed to the Supreme Court, which agreed to hear the Illinois case (Savage, Los Angeles Times, 6/30). Although the case will focus on the Illinois statute, the Wall Street Journal reports that the court's decision would affect 37 states and the District of Columbia, which have similar independent review board rules. However, the Senate-approved bill would make the debate "moot" because it would require managed care companies to establish denial of care appeals procedures. The Bush administration had filed a brief, stating that the Supreme Court's review was not necessary because Congress is still considering the legislation (Greenberger, Wall Street Journal, 7/2). However, lawyers for Prudential argued that it is not certain "such a provision will emerge from the sausage factory that is the legislative process in the foreseeable future" (New York Times, 6/29). If lawmakers do not pass the legislation this summer, the Supreme Court will hear the case when it begins its new term this fall (Los Angeles Times, 6/30).