A federal judge in Houston has upheld a controversial and potentially precedent-setting 1997 law allowing managed-care enrollees in Texas to sue their health plans for damages in cases of alleged delay or denial of care.
The Sept. 18 ruling by U.S. District Judge Vanessa Gilmore upheld one provision of an HMO reform package passed by the Texas Legislature in May 1997. But it voided another that allowed HMO enrollees to appeal denials of treatment to an independent panel, ruling that federal law prohibits forcing health plans to engage in such a review process. The judge's two-pronged decision could inspire similar laws in other states but also could create problems for the 18 states that now have external review laws on the books.
However, plaintiff Aetna Health Plans and the Texas attorney general's office are working together to try to reinstate the law's independent review provision.
The ability to sue HMOs is a central objective of many patient-protection laws being proposed by several states and at the federal level. The HMO industry has been protected from malpractice and damage lawsuits by the federal Employee Retirement Income Security Act, or ERISA.
ERISA was designed, in part, so employers could negotiate and direct healthcare benefits across state lines and bypass regulations that differ by state.
Several Texas-based subsidiaries of insurance giant Aetna filed suit last year in federal court to overturn that state's "right to sue" law.
Although neither the legislation's opponents nor its backers received all they wanted from the court decision, consumer advocates were quick to declare victory.
Dan Morales, who as Texas attorney general has filed lawsuits against Blue Cross and Blue Shield of Texas, Kaiser Permanente and other health plans, said he was pleased the court upheld "a law that holds HMOs accountable for decisions they make" on the availability or quality of their enrollees' healthcare (Sept. 28, p. 20).
Jamie Court of Santa Monica, Calif.-based Consumers for Quality Care, said the ruling supported the law's central provision: the ability of consumers who are denied care to sue health plans for damages.
"It was a complete victory (that is) really going to fuel our efforts" to pass similar legislation elsewhere, he said.
But Aetna U.S. Healthcare, Aetna's managed-care subsidiary, found something to embrace in Gilmore's decision.
Said David Simon, Aetna's chief legal officer: "The judge appears to have agreed with us" that the law's liability provision cannot be used to challenge benefit and coverage decisions by independent-practice-association-model health plans. Instead, he said, those liability provisions relate to negligence in the "actual performance (of medical services) . . . and we don't provide medical services."
Consumer groups and the Texas Medical Association, which supported the original law, vehemently disagreed with Simon's interpretation of the decision.
Each side has 30 days from the date of the Gilmore ruling to make an appeal, according to spokesmen for Aetna and the Texas attorney general's office.
Aetna is working with the attorney general's office to stay the portion of the judge's decision striking down the independent review panel-the only issue on which the two sides agree-"while considering a review process that complies with applicable law," Simon said.
Aetna favors the review panel as the best of the original law's provisions.