The shield many health plans use to protect themselves from liability lawsuits is slowly being dismantled.
The latest chink in the armor came when the Pennsylvania Supreme Court ruled on Dec. 23 that the federal Employee Retirement Income Security Act does not pre-empt state tort law claims against U.S. Healthcare. (Aetna acquired U.S. Healthcare in 1996 and became Aetna U.S. Healthcare, which is based in Blue Bell, Pa.)
The court's decision clears the way for medical negligence cases against HMOs in Pennsylvania, a move that's long overdue, area physicians say.
"Physicians have been frustrated when patients sue them for decisions being made by HMOs," says John Lawrence, M.D., president of the Pennsylvania Medical Society and a Media, Pa., rheumatologist. "Physicians are held liable for treatment decisions, and we have long held that HMOs should be held liable also."
The decision comes as the nation is focusing more and more on HMO liability and often penalizing managed-care companies for allegedly concentrating on the bottom line. Late last month, a California jury socked Aetna with $115 million in punitive damages in a case involving denied benefits.
According to the court's decision, in 1991 Basile Pappas, who was enrolled in U.S. Healthcare's HMO, was admitted to Haverford Community Hospital complaining of paralysis and numbness. The emergency-room physician concluded Pappas had an epidural abscess pressing on his spinal column. Consulting neurologists concurred that Pappas needed to be transferred to a university hospital for specialized treatment and arranged to move him to Jefferson University Hospital in Philadelphia.
About half an hour later, U.S. Healthcare informed the emergency physician it would not cover Pappas' treatment at Jefferson. The physician appealed, and after another half an hour, U.S. Healthcare again denied the request. The HMO did grant permission, however, for Pappas to be transferred to one of three other Philadelphia university hospitals. Pappas eventually was transferred to the Medical College of Pennsylvania, more than four hours after he had arrived at Haverford's emergency room.
Pappas, who is now a quadriplegic, sued his primary-care physician in Delaware County (Pa.) Common Pleas Court for malpractice and sued Haverford for causing an inordinate delay in transferring him. Both defendants then filed third-party suits against U.S. Healthcare. The HMO filed a motion for dismissal of all third-party claims, which the trial court granted. Pappas then settled with the primary-care physician and hospital, but the defendants' insurance companies decided to proceed with the case against the HMO.
The case, which has been winding through the court system for years, created some odd bedfellows: Both the American Medical Association and the Pennsylvania Trial Lawyers Association filed amicus briefs with the plaintiffs, according to prosecuting attorney Stephen Ryan of the Philadelphia-based firm Marshall, Dennehey, Warner, Coleman & Goggin.
The Pennsylvania Superior Court and then the state Supreme Court reversed the trial court's decision and ruled that ERISA does not protect the HMO from medical negligence claims. In the unanimous decision, the justices wrote, "Congress did not intend to pre-empt state laws which govern the provision of safe medical care" when it enacted ERISA.
Aetna, which has had no comment on the decision, filed an application with the Supreme Court to reargue the case. It also is expected to appeal the decision.
Some observers hope this latest decision will mark the end of the ERISA defense and force Congress to clarify and rewrite the broad federal law and replace it with one allowing patient claims against HMOs. Texas currently is the only state with an HMO liability law, which legislators passed in 1997.
Others, however, caution that such legislation would be a mistake. Instead, the liability debate ought to move out of the courts and the ERISA arena altogether, and Congress should legislate other avenues of recourse, such as external reviews, says Harrisburg, Pa., attorney James Saxton.
"Let's see if we can find a different way to hold these organizations accountable than to simply open the doors to litigation. (HMO liability laws) could just breed more litigation and drive up the value of all verdicts," says Saxton, who works with health plans throughout Pennsylvania. "I think it's a classic case of, 'Be careful what you wish for, because you could get it.' "