HMOs LIABLE IN TEXAS. A U.S. District judge has upheld a Texas law that allows patients to sue health plans for malpractice.
Aetna U.S. Healthcare challenged the law, arguing the federal Employee Retirement Income Security Act, or ERISA, pre-empts state law and protects health plans from being sued. Late last month, Aetna's challenge was rejected, but the judge's decision did limit lawsuits to cases in which negligence occurs in the actual performance of medical services.
The law was passed last year as part of a sweeping managed-care reform package and was the first of its kind in the country. To date, however, no cases have< been brought under it.
Texas Medical Association lobbyist Connie Barron described the decision as "excellent," saying she believes it's a victory for physicians and patients.
"If a managed-care organization is going to make a medical decision, they do have legal accountability."
Whether Blue Bell, Pa.-based Aetna will challenge the ruling remains to be seen.
David Simon, Aetna's chief legal officer, contends health plans remain under ERISA protection and are not liable under the Texas law because they do not deliver medical services.
AMA'S CROSS TO BEAR. The American Medical Association has asked a Georgia court to allow it to be a plaintiff in a lawsuit against Blue Cross and Blue Shield of Georgia.
The AMA on Sept. 11 made its motion in regard to a lawsuit filed last December by the Medical Association of Georgia, the state's medical society, in Fulton County Superior Court in Atlanta. The AMA typically joins such cases when asked to do so by a state or local medical association, spokesman Robert Mills says.
The lawsuit was filed after the Blues reduced reimbursement rates on its indemnity plan, affecting 13,480 doctors.
The AMA has pledged financial assistance and other resources to the case.
PRG BID EXPECTED. A Memphis, Tenn., ophthalmologist may have the support he needs to take over eye-care physician practice management company Physicians Resource Group.
The Dallas-based company announced on Sept. 22 that it had postponed its board meeting scheduled for the day before because it was awaiting a bid from David Meyer, M.D. The company, in a prepared statement, said it expects to see Meyer's bid sometime between Sept. 29 and Oct. 2. Meyer did not comment.
Meyer, a former PRG board member, in August sent a letter to the PPM's physicians asking them to participate in a $5-per-share purchase of the company, which has 10 million shares outstanding. Without their support, the deal would not go through.
PRG is being sued by physicians and shareholders because of dissatisfaction with its operations and stock price, which had sunk below $1 in September before rallying to more than $2 on Sept. 22. PRG and Meyer signed a letter of intent on July 25 (see September, page 4).
Meyer's bid required all lawsuits to be settled for the bid to be successful. Neither the company nor Meyer commented on whether that had taken place.
DOCS STILL DOWN ON HMOs. It's hardly news that physicians are unhappy with managed care, but now marketing information firm J.D. Power and Associates has the numbers to prove it.
Nearly 70% of 30,000 physicians in 22 markets surveyed by J.D. Powers consider themselves "anti-managed care." Physicians cited having to justify their clinical decisions to health plans and utilization review as most troubling.
Physician morale is low, according to the survey, and 46% actually indicated they "often think about leaving clinical practice."
The survey also asked physicians to rate health plans and found satisfaction with reimbursement and administrative policies were the most influential factors.
HUMANA TAKES PPM-RELATED CHARGES. Humana says it will take $132 million in charges for the third quarter of 1998 that, in part, are related to the cancellation of contracts with some physician practice management companies. The Louisville, Ky.-based insurer would not say how much of the write-off is associated with PPMs, nor which companies' contracts are being canceled.
However, spokesman Greg Donaldson says the write-off has nothing to do with bankrupt FPA Medical Management. Foundation Health Systems, Oxford Health Plans, PacifiCare Health Systems and WellPoint Health Networks have either taken charges or added to reserves because of losses associated with FPA (see September, page 2).
Support from health plans has kept FPA's Chapter 11 bankruptcy from sliding into Chapter 7 liquidation. "We believe in FPA's strategy," Donaldson says.