Judges Nationwide Are Allowing Patients To File Claims Against HMO's

27 Jul 2007

WASHINGTON -August 15, 1999 - Over the last 20 months, judges across the country have begun allowing patients to sue health-maintenance organizations for medical malpractice, after decades in which such claims were repeatedly rejected by the courts.

In the past, courts often allowed HMOs and other managed-care companies to avoid liability for their decisions, saying patients had no right to sue for damages. Essentially, this "immunity" permitted the entity actually responsible for the wrongdoing to escape legal accountability to the injured patient.

But rulings by judges in U.S. 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.

Suits now more common

The suits have become common as patients chafe under the cost-control restraints of managed care, now the dominant form of health insurance in the United States. Patients who have received substantard care, have filed claims in an effort to be compensated for serious injuries and deaths that have resulted from HMO misdeeds.

Whether patients should have the right to sue their health insurance companies has been the most divisive issue before Congress as the Senate and the House debate legislation known by its backers as the patients' bill of rights.

The Senate recently passed a bill that would expand protections for a limited number of Americans in managed-care plans, after rejecting Democratic efforts to guarantee the right to sue. President Clinton said he would veto the measure because it offered ``toothless, halfhearted protections.'' A move is afoot in the House to draft a version that would include new rights to sue.

The federal law that regulates employee benefits has long formed a protective shield around HMOs. The law, the Employee Retirement Income Security Act of 1974, known as ERISA, made it difficult for consumers to win liability claims for the denial of benefits, primarily because Congress wanted employers to establish health and pension plans without being exposed to expensive litigation.

Patients and their attorneys have recently found ways to get 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.

For example, a U.S. District Court in Urbana, Ill., ruled this year that a woman could sue a health plan, Health Alliance-Midwest, on the ground that its nurses failed to diagnose her husband's cardiac distress over the telephone. A nurse told Gary L. Crum, 42, that his chest pain was probably a result of ``excess stomach acids,'' the lawsuit said, but Crum died of a heart attack a few hours later.

His wife, Kelly A. Crum, is challenging the ``quality of medical care,'' not a denial of benefits, so she may press her claim under Illinois' wrongful-death statute, Judge Michael P. McCuskey said.

Evolving standard

Until 1995, the Supreme Court emphasized the broad reach of ERISA, which pre-empts ``any and all state laws insofar as they may now or hereafter relate to any employee benefit plan.'' But since 1995, the court has emphasized its presumption that states may exercise their ``historic police powers'' in ``fields of traditional state regulation,'' including health care and insurance.

In an effort to hold health plans more accountable, state insurance commissioners recommended this month that all states establish appeal procedures for people who want to contest the denial of care by health-maintenance organizations. Model legislation, issued by the National Association of Insurance Commissioners, would allow consumers to appeal to an independent panel of medical experts.

Legal experts say that without a change in federal law, it is difficult to sue an insurer for denying care to a patient under the terms of an employee benefit plan. But plaintiffs are already using novel arguments to win damages for inadequate quality of care -- in short, for malpractice.

In the past, when a patient sued for malpractice, the target was usually a doctor. But Promutual Group, a malpractice insurer based in Boston, says ``managed-care organizations are being held liable in more and more medical malpractice cases.''

Daly D.E. Temchine, a Washington lawyer who represents managed-care organizations, said patients and their attorneys liked to name HMOs as defendants because the health plans were seen as having ``deep pockets.''

In recent months, judges in 15 states have forced HMOs to defend their actions in cases involving suicide, heart attacks, sudden infant death syndrome, cancer and other illnesses. Those states are Arizona, California, Connecticut, Florida, Illinois, Massachusetts, Missouri, New York, New Jersey, Ohio, Oklahoma, Pennsylvania, South Carolina, Texas, Virginia.

HMOs held responsible

Judges have said HMOs can be sued on a variety of legal theories. Some courts have held HMOs legally responsible for the negligence of their doctors, especially if the doctors act like agents of the HMO. Other courts have allowed patients to sue HMOs for ``breach of fiduciary duty,'' meaning their obligation to act in the interest of participants and beneficiaries.

In Connecticut, Judge Christopher F. Droney of U.S. District Court ruled recently that one of the state's largest HMOs could be sued for negligence by a man whose son had committed suicide.

The judge said the lawsuit could go forward in state court because it involved ``claims for medical negligence, not claims for the improper denial of plan benefits.''