Five years' worth of claims data from Farmers Insurance Group support the belief of some healthcare attorneys that claims and lawsuits alleging negligence under managed care are growing.
The Farmers data show that claims increasingly are targeting physician groups rather than HMOs. That would be expected as HMOs pass more risk and responsibility for total patient care on to physicians.
Los Angeles-based Farmers insures 32 HMOs and 52 physician groups across the country. The total cost of 1,572 claims against those providers from 1991 to 1995 was $87 million, which includes settlements, legal expenses and contributions to reserves, said Ariel Castillo, research specialist with Farmers' healthcare professional liability division.
Farmers' data show that from 1991 to 1995, claims and suits against its HMO clients decreased from 146 to 64, while those against their insured physician groups jumped from 116 to 153.
"This could be due to the fact that the burden of treatment has been passed on to the physician groups by the HMOs," Castillo said.
Another consideration is that the number of physician groups insured by Farmers grew significantly from 1991 to 1995, while the number of HMOs insured remained about the same. Nevertheless, during that period, HMO enrollment grew enormously and claims against them still fell, a Farmers spokeswoman noted.
The downward trend for claims against HMOs seems to be continuing. "We have seen some decrease in the amount of suits ending up in our office against our traditional clients-HMOs and other benefit plans," said Lawrence J. Rose, a partner with Hassard Bonnington, a San Francisco law firm that handles malpractice cases.
An explanation could be that "just to avoid the publicity that has followed managed-care plans in the aftermath of the Fox case....(HMOs) are making a very strong effort to resolve issues" at a lower level, before they get to be lawsuits, Rose said.
In 1993, Oxnard, Calif., attorney Mark Hiepler won a record $89 million verdict against Health Net for his late sister Nelene Fox, a breast-cancer victim, and her family. Hiepler charged that Health Net wrongfully denied coverage for Fox's bone-marrow transplant. The award was reduced in a settlement.
Hiepler filed two other well-publicized cases that resulted in multimillion-dollar verdicts. Such high-visibility cases have given the public the idea that litigation against HMOs is common "because corruption is rife," said Mark Hyde, president and chief executive officer of LifeGuard, an HMO based in San Jose, Calif.
However, Hyde said, under the federal Employee Retirement Income Security Act, or ERISA, members can't sue employee benefit plans for punitive damages, only to recover medical costs. Much litigation also has been headed off by HMO grievance mechanisms that are mandated by federal and state law and by some HMOs' binding arbitration provisions.
But Grover E. Czech, an attorney with LeBoeuf, Lamb, Greene & Macrae in Washington, said some recent suits against HMOs have been allowed to go forward despite ERISA, and he expects more will do so.
Farmers cautions that for the years 1994 and 1995, the data is not yet "ripe" because it takes about two years for claims to be reported. The number of claims against both HMOs and physicians for 1994 and 1995 may go up over time, Castillo said.
But if the trend continues, physician groups would still bear the brunt of the claims. With seven months to go in 1996, physicians already have racked up 153 claims for 1995, Castillo noted.
Claims against physicians climbed steadily to 233 in 1994 from 116 in 1991, according to Farmers' data. During that time, claims against HMOs decreased to 120 from 146.
Another caution comes from the Physicians Insurers Association of America, a group of medical malpractice insurers that has tracked claims against physicians since the 1920s. "Malpractice claims are cyclic....and we're not sure what the reasons for the cycles are," said Lori Bartholomew, the PIAA's loss prevention and research consultant.
The last downturn in claims frequency was the late 1980s, and now the cycle is going back up, she said. But it will take about five years to determine whether managed care is playing a part in the upswing, she said.
In fact, the PIAA just did a study of claims involving acute myocardial infarction. Out of 349 cases, only seven appeared to be managed-care-related, she said.
On the other hand, attorneys point to a growing number of cases alleging negligence against managed-care systems. "Litigation against all managed-care networks is increasing," Czech said.
He said the adverse publicity about managed care is generating more claims against all players in the system simply by giving dissatisfied patients ideas about where managed care is vulnerable.
For example, the controversy over capitation has given rise to claims of failure to provide treatment. Patients are also suing networks for "negligent credentialing," or failing to make sure a physician has the proper training, Czech said.
Rose said his firm has not yet seen growth in medical malpractice cases against physicians that are clearly managed-care-related. But he's working on four new cases "that we've clearly identified as emerging managed-care litigation, and they all seem to be inspired by Ching vs. Gaines."
(r)ˆ»In that case, which names a physician group as defendant but not its HMO, Hiepler argued that the doctors had a financial incentive not to refer their patient, Joyce Ching, to a specialist. Because they did not do so, they breached their fiduciary duty to Ching, who subsequently died of rectal cancer, Hiepler argued (Dec. 4, 1995, p. 38).
Although a Ventura County, Calif., judge threw out the breach of fiduciary duty argument, a jury awarded Ching's family $2.9 million on medical malpractice grounds.
Hiepler told executives at a recent symposium on managed care sponsored by the Hospital Council of Northern and Central California and the Healthcare Financial Management Association that he believes California case law shows that breach of fiduciary duty is a "potentially viable cause of action" in future suits.