Georgia last month became the second state, following Texas, to allow patients to sue HMOs for medical malpractice.
Democratic Gov. Roy Barnes, an outspoken supporter of the Georgia HMO liability bill, signed the measure into law April 20. It had passed the Legislature by nearly unanimous votes in both houses March 18.
Similar legislation is pending in four other states, and the new Georgia law could help push laws through those states' legislatures, says David Cook, director of government relations for the Medical Association of Georgia.
"It's the top issue at the (American Medical Association and) at medical societies across the country," he says.
HMOs are shielded from medical malpractice suits under the federal ERISA pre-emption, which allows self-insured health plans to claim exemption from state regulation. The Texas law, which was passed in 1996 and took effect in 1997, overrides the pre-emption and allows liability suits to be brought against health plans. So far, only one case has been filed under the statute.
The Georgia law is very similar to the Texas law and allows patients to sue if they think an HMO's decision to delay or deny treatment resulted in harm to them. The law does not, however, permit patients to sue for punitive damages.
Also, patients can't sue if the plan does not cover the condition for which they want treatment.
While the Texas law requires patients to exhaust an external review and appeals process before suing, the Georgia law will allow patients to sue first. Judges may return the case to review boards at their discretion.
Momentum to pass liability legislation is building across the country. In Illinois, a liability bill recently cleared the state House and awaits Senate approval; in Massachusetts one cleared the Senate; and in New York one cleared the Assembly. In California, a bill passed a key Senate committee in April and this month will come before the state Senate Appropriations Committee.
Additionally, a federal appeals court last month affirmed a Texas district court's decision to uphold the state's law. Aetna U.S. Healthcare has been challenging the validity of the law since it was passed in 1997.
"I think this is an issue where states are looking beyond their own borders to see what is happening elsewhere," says Dick Cauchi, a policy analyst with the Denver-based National Conference of State Legislatures. "I think (the court decision) was another signal to states that this state law can have validity over ERISA pre-emptions."
While HMO liability has its supporters, vocal opposition is coming from the insurance industry and health plans in all states. The California Association of Health Plans is fighting the state's bill because litigation is expensive and inefficient, says Maureen O'Haren, executive vice president of legislative affairs.
The association is supporting competing bills that would mandate external review for policy decisions.
State Sen. Liz Figueroa, sponsor of California's liability law, says external review is not enough because health plans suffer no penalties for denying treatment. "I do not expect that there will be numerous lawsuits when (the bill) is finally enacted," she says. "Instead, I expect HMOs to start making better decisions in the first place. No more will they be able to delay and deny care with impunity."