Right Of Medicare Recipients To Sue HMOs For Punitive Damages Upheld
27 Jul 2007
August 21, 1999 - A California appeals court has ruled that Medicare recipients may sue their health maintenance organizations (HMOs) for punitive damages in state court for denying requested referrals, tests or treatments.
This is the first appellate decision on whether Medicare enrollees living in California could sue their HMOs in state court. Other similar cases had been dismissed on grounds that the federal Medicare law precluded complaints at the state level. In the federal courts plaintiffs could sue only for the value of services denied. These rulings did little to encourage HMOs to treat enrollees or members more fairly.
The California appellate decision held that consumers who wish to use the quicker state court process, including its potential for punitive damages, may do so in certain cases.
Congress is presently debating whether to give more patients the right to sue managed-care plans.
The California decision will permit many Medicare recipients to sue their HMO when they are denied treatment. It will also likely cause the HMOs to give a fairer consideration to the requested care in the first instance.
The important ruling grew out of an Orange County case in which a retired businessman alleged that PacifiCare Health Systems Inc. of Santa Ana and its physician provider group, Greater Newport Physicians Inc., had engaged in fraud and unfair business practices when it denied him a referral for a lung transplant.
George McCall, who suffered from progressive lung disease and has since died, said in his suit that PacifiCare denied him important treatment and repeatedly refused to refer him to a specialist for a transplant.
McCall sued PacifiCare, its medical group and his pulmonologist, alleging fraud and negligent infliction of emotional distress. Last summer, an Orange County Superior Court judge dismissed the suit, holding that it was precluded by the federal Medicare Act. The dismissal essentially meant that the claim would have to be brought in federal court and could be limited to only seeking the cost of the denied treatment, which would be a meaningless remedy under the circumstances.
But writing for the unanimous court, Judge William Bedsworth said some federal appeals courts have held in recent cases that claims that do not merely seek reimbursement for Medicare benefits can be filed in state courts.
The appellate panel reversed the Orange County judge's dismissal, allowing McCall's widow, Barbara, to proceed with the suit.
The decision is another step in a trend of recent holdings that HMO members are entitled to seek more than merely the cost of the denied treatment, consultation or test. It is likely to be followed by state courts throughout the U.S.
