Effect of Federal Law on HMO Lawsuits
A national debate is raging over the influence of Health Maintenance Organizations (HMOs) and insurance companies on our health care. Decisions about medical treatment seem to be made by non–physicians who are affiliated with an HMO or insurance company office far away from the patient seeking treatment. Often, these decisions end in disastrous results for patients and their families.
HMOs and medical insurance company abuses come in a variety of forms. The most common are:
- routine denials of initial claims;
- failure to process claims;
- denying a valid claim or only paying a portion of a fully covered claim;
- including and enforcing a mandatory arbitration clause in enrollment forms that is not obvious and eliminates the patient's right to sue in court;
- postponing medical treatment;
- failure to provide needed treatment or diagnosis;
- death of a loved one due to not providing necessary medical treatment; and
- medical malpractice of HMO doctors or staff; and
- filing a monetary lien against the patient for so–called recovery of the difference between the insurer's payment and the hospitals usual and customary charges.
HMO Lawsuits and the Employee Retirement Income Security Act
At times, the federal law known as the Employee Retirement Income Security Act (ERISA) limits the amount of damages that patients with private employers—as opposed to public employers such as county, municipal or government employers—can recover when they sue an HMO. ERISA allows the costs of denied medical procedures, but not amounts for injury and pain.
ERISA often eliminates a patient's right to sue at all in state courts. If a physician, medical group or HMO bases a decision not to provide necessary medical treatment on a nonmedical reason, most states find that ERISA usurps the right to any type of state lawsuit. Various states are changing this policy, and have laws aimed at allowing citizens to receive financial recovery which represents a better approximation of the wrong the patient has suffered.
In 1997, Texas became the first state to enact a law that allows patients to sue HMOs for failure to use ordinary care in making health care treatment decisions (TX Civil Practice & Remedies Code, Title 4, §§ 88.001–88.003). Georgia and California followed in 1999. However, the Georgia law only applies to failure to adjust claims in a "timely and appropriate manner" (GA Code ann 51–1–48). The California law has a wider scope, also covering the failure to use ordinary care in providing medical care. The failure must cause serious harm and the denial, delay, or change of a health care service (CA Civil Code §3428). Others states that permit patients to have a right to sue HMO are: Arizona, Maine, New Jersey, North Carolina, Oklahoma, Oregon, Washington, and West Virginia.
Recent California cases favor patients in HMO lawsuits. On March 4, 2003, the Fourth District Court of Appeal in San Diego decided that ERISA did not eliminate a female patient's right to sue her HMO in state court. The patient had been refused coverage for her fertility treatment on the basis of her sexual orientation, but the appellate court found that this "nonmedical reason" for denying her claim did not mean ERISA eliminated her ability to sue. (Benitez v. North Coast Women's Care Medical Croup; 106 Cal.App.4th 978; 2003).
HMOs and insurance companies may also try to bar a patient's right to sue by including a mandatory arbitration clause, forcing the patient to present any claim or dispute to an arbitrator, often of the HMO's choosing, instead of to a judge or jury. Another California appellate court found that PacifiCare, an HMO, could not enforce such a clause in its enrollment form. PacifiCare had not prominently displayed the arbitration clause, according to the court, and the patient was permitted to sue his HMO. (Imbler v. PacifiCare of California; 103 Cal.App.4th 567; 2002).
Other states also acknowledge patients' legal rights against HMOs. In one Connecticut case, a father claimed that an HMO was negligent in treating his son, who committed suicide (Moscovitch v. Danbury Hosp.; 25 F.Supp.2d 74; D. Conn.; 1998). The court held that the federal law, ERISA, did not preempt making a state claim. The father could sue the HMO in state court about the quality and level of care provided to his son. In another case, a medical malpractice claim was brought against an HMO for denying a tandem stem cell double transplant recommended by the patient's doctor, a contractor for the HMO (Cicio v. Does; 321 F.3d 83; C.A.2, N.Y.; 2003). The HMO suggested another treatment, and the patient died. His widow's claim was not preempted by ERISA because the HMO's rejection of the treatment involved mixed eligibility and medical judgment decisions. It required analyzing a medical condition. Again, the claim could be brought in a state court.
Getting Legal Help
You may need an attorney to enforce your legal rights if your HMO or insurance company dishonors your medical claim. HMOs and insurance companies are powerful, with numerous lawyers and resources at their call. In order to take them on and put things right, you will need experienced and tough lawyers on your side.
Brayton Purcell has the knowledge and resources to take on the health insurance industry. If you have been unfairly treated by your health insurer or HMO, we are here to help. There is no charge for your initial interview. You may contact us through this web site or at any of our offices.