State lawmakers have picked up steam in their efforts to give patients the right to sue their HMOs, even as Congress bogs down in attempts to pass a similar law at the federal level.
As of mid-May, 24 states had pending legislation that would give patients the right to sue health plans under certain circumstances.
Since the legislative sessions began in January, four states--Maine, Washington, Arizona and Oklahoma--have given consumers the right to sue their health plans. That brings to seven the number of states where patients can sue their HMOs, something Congress has not passed on a national level three years running. Patient bill of rights legislation died in four other states for various reasons; in one case, the session adjourned before the bill could be heard.
"Some of the states have become frustrated at the way the bill of rights debate has gone--will there be a right-to-sue provision or won't there be a right-to-sue provision," says David Studdert, a policy analyst at Rand Health in Santa Monica, Calif. "There's a section out there that (feels) Congress may not do enough in this area . . . The states are feeling like they need to take (action)."
That was the case in Maine, where the governor on April 27 signed into law a bill that, among other things, allows patients to sue their HMOs in certain circumstances.
"There's a great concern in the physician community that Congress is not going to be able to accomplish anything to address the ERISA pre-emption," says Andrew MacLean, general counsel and director of governmental affairs for the Maine Medical Association. "There's widespread belief among state legislatures that Congress can't, mainly for political reasons, accomplish this. Certainly that has been the case in Maine."
As many as eight different patient rights bills were floating around the Maine Legislature in January 1999. When the 1999 session wound down, only two of the eight were carried over to the 2000 session. During the summer recess, committee members met to hammer out the details of the bill, which was being pushed by consumers and the MMA. MacLean says the right-to-sue provision was the only controversial aspect of the bill.
What got the issue into law was an indication from the governor that he was willing to support a limited provision allowing patients to sue, MacLean says.
"Most people felt that he would not likely support an expansion of the liability," he says. "It was a bit of a surprise."
The new law is a mixed blessing to payers, says Joe Mackey, an attorney for the Public Affairs Group, which lobbies for clients such as Cigna and the Health Insurance Association of America.
"In one sense it is a benefit and protection for the HMOs because it limits the liability to $400,000 for noneconomic damages and eliminates punitive damages," he says.
On the other hand, there's a concern that the law will encourage lawsuits against health plans and physicians, he says. An attorney could use the settlement from the health plan to finance a case against the physician, he says. And then there's the concern about driving up healthcare costs. Maine, Mackey says, has one of the highest costs for healthcare and health insurance in the country.
But it's unlikely the health plans will challenge the law.
"It doesn't appear to be unconstitutional," Mackey says. "It may be unwise, but it's not unconstitutional."
President Clinton planned to meet with House and Senate leaders to find out what is holding up the federal bill, but as of late May the meeting had not happened.
Bipartisan negotiators have been working on a compromise between the House and Senate versions. One of the main differences is allowing patients to sue their health plans because they suffered after treatment was denied, a provision Clinton wants in the final version.
The House bill, which was passed last fall, includes that provision. The Senate bill would not.
The patient bill of rights will likely be a hot issue in the presidential campaign. Vice President Al Gore favors giving patients the right to sue their HMOs while Texas Gov. George W. Bush says he favors a bill of rights but with limited HMO liability.
Lawmakers across the country aren't waiting for a presidential election; they're moving on other healthcare issues, including allowing physicians to collectively bargain with health plans, something also pending before Congress (see May, page 93).
Historically, states have taken the ball from Congress and run with it because they've tired of waiting for Congress to make decisions, says Randy Bovbjerg, principal research associate with the Urban Institute, a think tank in Washington, D.C.
"(Congress is) happy to load . . . requirements on someone else," he says.
Added to that in the case of healthcare is political pressure, Bovbjerg says.
"We have gone from having all of the benefits we wanted and none of the costs to having the employers impose cutbacks through managed care where all we see are the cuts. We don't like it."
People don't like being surprised by restrictions and discovering that emergency care isn't covered, he says. And they're especially fearful of the stories told time after time on the nightly news, such as cancer patients being denied bone marrow transplants, Bovbjerg says. "The lightning rod for this are a few cases dubbed horror stories."
Texas in 1996 was the first state to pass a law allowing patients to sue their HMOs. The insurance industry in Texas was vocal in its concern about frivolous lawsuits. Although there's no central registry that records suits against health plans, the most recent count shows six suits have been filed against health plans since the law was passed.
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 took effect in 1997, overrides the pre-emption and allows liability suits to be brought against health plans.
Georgia was the second state to pass a law allowing patients to sue their HMOs for medical malpractice, and California soon followed with its bill allowing residents to sue their healthcare plan. Gov. Gray Davis last fall signed into law a comprehensive managed care law that includes the right to sue.
Washington state soon followed suit, passing a patient bill of rights this year that, among other things, allows patients to sue their health plans.
Washington's House of Representatives passed the bill unanimously, and the bill passed in the Senate with one dissenting vote, says Tom Curry, CEO of the Washington State Medical Society.
"Both parties can read the public opinion polls," he says. "Clearly the public wanted to see a measure passed."
The WSMS wanted a health plan accountability law but was neutral on the right of patients to sue their health plans, Curry says. However, polls showed that patients wanted a liability law, he says.
"You can trot out all sorts of plans like managed care, whatever that is, and the basic dynamic out there in the towns and neighborhoods is there's no trust they're going to work on behalf of the patients."
The Washington state House and Senate have had an equal number of Democrats and Republicans since 1998. "Both parties realized they needed to get something done" before the elections, Curry says.
Curry expects more healthcare reforms to be done at the state level. "It's just more politically doable," he says.