The U.S. Supreme Court will weigh in on a key healthcare debate that Congress has failed to settle: whether patients have the right to sue for damages when their HMOs refuse to cover medical care recommended by a doctor.
The justices agreed last week to hear appeals by insurance giants Aetna and Cigna Corp., both of which were sued for negligence in Texas state court over coverage decisions that resulted in injury to patients. The ruling, expected by early summer, might clear up what has become a quagmire of opposing court decisions and would help fill the legislative void left last year when the House and Senate deadlocked on a federal patients' bill of rights.
"There's a need for clarity," said Susan Pisano, spokeswoman for the AAHP/HIAA, formed last month in a merger of the American Association of Health Plans and the Health Insurance Association of America.
At issue is whether patients have the right to sue their insurers in state courts or are barred from doing so under a 30-year-old federal law that gives the U.S. government sole power to regulate employee benefit plans.
The distinction is important because in state courts, juries can award the injured party millions of dollars in damages; but in federal court, the most a plaintiff can receive is the value of the benefit that was denied.
Both lawsuits were filed under a 1997 Texas law that made the state the first to give patients the right to sue their HMOs. Since then, 13 other states have passed similar laws.
In one case, a patient sued Aetna, Hartford, Conn., for negligence after the HMO required him to use a less-expensive arthritis drug than the one his doctor had prescribed. The man was later rushed to the emergency room with bleeding ulcers.
In the other case, a woman sued Philadelphia-based Cigna after the insurer allowed her only one day in the hospital to recover from a hysterectomy even though her doctor had recommended a longer stay. She later suffered complications, which she blamed on the early release.
Last year, the 5th U.S. Circuit Court of Appeals in New Orleans ruled that both cases should be heard in state court, overturning a lower court's ruling.
The insurers have asked the Supreme Court to review the matter, arguing that allowing state courts to rule on cases involving administrative decisions would violate the Employee Retirement Income Security Act of 1974, designed to ensure uniform regulation of employer-sponsored benefit plans nationwide. Nearly 160 million Americans are covered under such plans.
Consumer advocates, however, argue that insurers are making medical, not administrative, decisions when they deny coverage of care, and that ERISA-which was signed by President Ford long before the rise of managed care-was never intended to prevent patients from seeking legal recourse when injured by such a decision.
"For someone who has been seriously harmed, (litigation) is their only option," said Lisa McGiffert, senior healthcare policy analyst for Consumers Union in Austin, Texas. "All patients harmed by malpractice should be entitled to recoup their medical costs and lost wages and receive fair compensation for their pain and suffering."
There is a great deal at stake for the nation's insurers, which contend their protections under ERISA-and subsequently, their best means of controlling medical costs-are being steadily whittled away. Earlier this year, the Supreme Court ruled that states could require HMOs to open their networks to any provider wishing to join (April 7, p. 6).
That decision came down less than a year after another high court ruling that granted states the right to force insurers to submit to an external review when a patient contests a coverage denial (June 24, 2002, p. 4).
The AAHP and a number of large employer groups filed a friend-of-the-court brief in August warning that, if insurers are exposed to a "costly patchwork" of conflicting state laws regarding the right to sue, consumers would "pay the ultimate price" through higher premiums and reduced benefits.
"It's important to realize who really pays the price of lawsuits," Pisano said, "and that's patients and employers."