The U.S. Supreme Court heard oral arguments in a potentially precedent-setting case that will determine whether patients can sue their HMOs for medical negligence in state court -- where juries can award plaintiffs millions of dollars for pain, suffering, lost wages and other costs -- or whether they will be forced into federal courts, where they can recoup only the value of the benefit denied by the HMO.
The outcome could affect the legal rights of 130 million Americans covered by employer-sponsored managed-care plans and affect the future of a groundbreaking Texas law passed in 1997 to hold HMOs accountable for medical decisions. Texas and nine other states now have laws allowing patients to sue their HMOs for malpractice.
The case consolidates separate lawsuits filed against Aetna and Cigna Corp. under the Texas Health Care Liability Act.
One suit involves Juan Davila, who suffered from bleeding ulcers after Aetna denied him the brand-name painkiller prescribed by his doctor in favor of a cheaper generic alternative.
The other suit involves Ruby Calad, who suffered complications after Cigna discharged her from the hospital within one day of having undergone a complicated hysterectomy.
The plaintiffs argued in 2000 that HMOs, just like doctors, should be held liable for poor treatment decisions. The lawsuits, however, were moved to federal court after the insurers successfully argued that they were protected from state malpractice lawsuits under the federal Employee Retirement Income Security Act of 1974, which regulates employer-provided health benefits.
The 5th Circuit Court of Appeals overturned that decision in 2002, and the insurers appealed to the Supreme Court. A final ruling is expected later this year.