Managed-care plans won a legal battle last week in the long-running war over patients' rights, but their victory could increase the pressure on Congress to pass new national restrictions on HMO practices.
The Supreme Court last week came down on the side of HMOs that use financial incentives to encourage physicians to cut costs. In a unanimous decision, the court ruled in favor of the for-profit HMO run by the Carle Clinic Association of Urbana, Ill., which had been sued by a Bloomington, Ill., woman whose appendix burst during an eight-day wait for an ultrasound test.
The long-awaited decision, which came just days after the U.S. Senate defeated a bipartisan House-passed managed-care reform measure, stoked an already heated debate (June 12, p. 4).
Managed-care critics were quick to seize upon the court's decision as a sign that Congress needs to pass a patients' rights measure.
"With this ruling, the Supreme Court isn't just asking for congressional action, they are shouting at the top of their lungs for us to act," said Rep. Charlie Norwood (R-Ga.), an author of the House legislation.
"The court's ruling underscores the fact that consumers can do little to hold their health plans accountable for decisions that wrongfully deny or delay needed care," said Ron Pollack, executive director of the healthcare consumers group Families USA.
Managed-care plans and insurers were just as adamant that Congress not use the court's ruling to argue for national legislation.
"What we're talking about isn't whether or not you can sue your health plan, but whether you can sue your health plan more often for more reasons and make employers liable," said Susan Pisano, spokeswoman for the American Association of Health Plans.
The lawsuit invoked the Employee Retirement Income Security Act, which regulates self-insured employer health plans. The patient, Cynthia Herdrich, claimed that paying physicians to limit access to care constituted a breach of fiduciary duty under ERISA.
The court decision, written by Justice David Souter, said ERISA doesn't view HMOs as fiduciary decisionmakers, however. To do so would undermine the law that created HMOs in the first place.
"The one point that seems clear is that she seeks the return of profit from the pockets of the Carle HMO's owners, with the money to be given to the plan for the benefit of the participants," Souter wrote.
"Since the provision for profit is what makes the HMO a proprietary organization, her remedy in effect would be nothing less than elimination of the for-profit HMO," Souter wrote. "Her remedy might entail even more than that, although we are in no position to tell whether and to what extent nonprofit HMO schemes would ultimately survive the recognition of Herdrich's theory."
The bipartisan legislation authored by Norwood and Rep. John Dingell (D-Mich.) would give managed-care enrollees the right to sue HMOs in state courts for damages involving the denials of covered benefits.
Senate-passed legislation does not include a right to sue. Arguing that a conference committee appointed to work out differences between the two bills had bogged down, Sen. Edward Kennedy (D-Mass.) earlier this month tried to attach the House-passed legislation to a Pentagon spending measure. That action was defeated in a 51-48 vote.