As patients and lawyers direct growing fury at HMOs, judges are clearing a path to give consumers their day in court.
Increasingly, plaintiffs are bypassing doctors and going after health plans, accusing them-among other things-of denying care and lying to patients. One lawsuit goes so far as to charge a health plan with extortion and mail fraud.
Within three days in October, three lawsuits--all of them carrying the potential of class action status--were filed against two of the country's biggest HMOs: Hartford, Conn.-based Aetna US Healthcare and Louisville, Ky.-based Humana. State and federal supreme courts stepped into the fray by agreeing to hear cases and ruling that patients have a right to sue their HMOs.
The floodgates opened on suits against HMOs even before the House of Representatives voted to give patients the right to sue their HMOs (See related story, page 22).
"As far as whether the courts have indicated a willingness to hear the cases and let them proceed, the answer is clearly yes," says Mark Waxman, a partner with the Foley & Lardner law firm in Washington. "We are now seeing rather large verdicts . . . that's attractive to the plaintiff's bar. The managed-care industry is a target of a lot of their ire."
Suing HMOs, he says, provides "a new deep pocket for what were traditionally malpractice cases."
Lee Newcomer, M.D., senior vice president for health policy at United HealthCare Group, Minneapolis, says it's clear that these cases aren't brought by patients.
"These are trial attorneys who have made a business attacking industries," he says. Among the attorneys going after healthcare industry are lawyers who took on, and in some cases took down, the tobacco industry. "I think it's an entirely different matter" than malpractice, he says.
The first suit was filed Oct. 4 against Humana, claiming that patients were harmed because the health plan didn't disclose that coverage decisions were sometimes based on cost factors, not medical factors. Lawyers are seeking class action status for the case filed in federal district court in Miami on behalf of those who are or have been members of Humana plans in the past four years. The plaintiffs are three Florida and two Texas residents. They say they weren't denied care but that they were harmed because their healthcare policies are worth less than they thought, according to one published report.
In an interview discussing strategies for dealing with class action suits, Aetna's CEO, Richard Huber, said he knew it was only a matter of time before Aetna US Healthcare would be sued. The next day, the company was hit with a lawsuit accusing it of withholding information from members. The case, filed in federal court in Philadelphia, accuses the plan of not telling members how doctors are paid and that physician income is affected by what tests and medications they prescribe. The case was filed on behalf of a Wilmington, Del., resident and all other members of Aetna US Healthcare's HMO plans who receive coverage as an employee benefit.
The next day, Aetna was slapped with a second lawsuit, this time accusing it of mail fraud and extortion. The suit claims the company used the mail to deceive customers and extort doctors to reduce care. The federal mail-fraud statute prohibits the practice of depriving people "of an intangible property right, such as the delivery of honest medical services."
The suit, filed in federal district court in Hattiesburg, Miss., cites violations of federal anti-racketeering charges, allowing plaintiffs to seek triple damages. No dollar amount was cited. The suit was filed on behalf of a Texas resident and others nationwide who have been in an Aetna HMO in the past four years.
The U.S. Supreme Court that same week agreed to hear an Illinois case in which a woman sued her HMO after her appendix burst. The HMO doctor diagnosed the woman with appendicitis but told her she had to wait eight days for a diagnostic ultrasound. The woman's appendix burst while she waited, causing peritonitis.
The woman won $35,000 in compensatory damages, but claims that the HMO breached its fiduciary duty and violated provisions of the Employee Retirement Income Security Act were thrown out. The 7th U.S. Circuit Court of Appeals reinstated that claim, and the HMO appealed to the U.S. Supreme Court, which will hear arguments in January and issue its ruling later next year.
Just days earlier, the Illinois Supreme Court had ruled that patients can sue HMOs for doctor negligence. A woman sued Chicago-based Share Health Plan of Illinois, claiming doctors failed to diagnose her cancer after she complained of pain. The 73-year-old died last year, but her husband continued to pursue the case. A circuit court had ruled she couldn't sue her HMO because the doctors were independent contractors. But the state Supreme Court said she could sue because the HMO had control over doctors since health plans often decide what's medically necessary and reward doctors who keep costs down and punish them for spending more than allowed. Share has said it is studying the opinion.
There isn't much data showing that HMOs adversely affect the health of enrollees, Waxman says.
"There have not been very many cases, at least I'm not aware of any, where the failure to disclose an incentive affected a patient's care one iota, or that the reason a physician ordered a test had to do with some sort of capitation system," Waxman says.
He also notes that the number of malpractice cases filed since managed care took hold isn't any higher than it was before its presence on the healthcare landscape.
But he said he recognizes that people are "suspicious" that physicians are being offered incentives to limit unnecessary tests and procedures and that those incentives are bad for patients' health.
He believes the plans have real exposure to a lawsuit on the handling of claims and billing.
He says it isn't unusual for the Supreme Court to review a case in the middle of a political debate. "This is not the first time the Supreme Court has been asked to look into the ERISA pre-emption issue," he says, "nor will it be the last."
The courts, over the past several years, have changed their minds on the ERISA pre-emption issue, says Diana Bianco, staff attorney and lead health policy advocate for Consumers Union. Consumers Union isn't involved in the cases but is following the rulings.
"From a consumer perspective, the problem is folks have had their hands tied as far as legal redress against HMOs behaving badly," Bianco says. "Litigation isn't the real solution. But it can have a preventive effect to say to HMOs, 'You have got to behave, or you get taken to court.' "
There will always be medical malpractice, Bianco says. However, patients have taken a while to realize that often it's their HMO, and not their doctors, limiting their care and potentially adversely affecting their health, Bianco says. "I do think the most heinous practices of HMOs are being challenged and will continue to be until they shape up their act."