The Supremes have done it again. In a recent stunning decision the Supreme Court has struck a major blow against patient rights. All nine justices agreed that patients do not have the right to sue their HMOs for malpractice, when they suffer harm due to the HMO's refusal to pay for recommended treatment. The justices issued a clear statement about the protective role of ERISA (Employee Retirement Income Security Act) for HMOs, despite the mounting challenges from professional associations, patients' rights groups, and state legislatures.
The ERISA laws of 1974, were originally enacted to protect employee pension funds in employer-provided, self-insured plans. The laws have been used by managed care as a shield to protect themselves against medical liability lawsuits. In other words, in cases of medical malpractice, the HMOs are not liable; only the individual physicians involved are medically liable and accountable. When managed care bureaucrats deny the use of certain diagnostic procedures or therapeutic techniques for cost-containment (the hallmark of managed care), the plans and their administrators are exempted from lawsuits of medical malpractice. The officials say they are not practicing medicine, only administering the fiduciary responsibility of their plans.
The ERISA shield has allowed the managed care industry to deny payment for care with impunity. Using the term “medical necessity,” HMOs have developed policies that deny reimbursement for critical medical treatment. This leaves the professional with the choice of treating the patient at his own expense or not offering the treatment. The system is designed to encourage rationing of care without limitation.
In an attempt to protect patients and hold the HMOs accountable, Texas, followed by nine other states, enacted laws allowing malpractice suits for damages in the state courts. The other states are Arizona, California, Georgia, Maine, New Jersey, North Carolina, Oklahoma, Washington, and West Virginia. During his presidential campaign, George Bush boasted that Texas was the first state to pass such a law. He neglected to mention that he chose not to sign this bill into law during his term as governor. As president, he asked the Department of Justice to submit an amicus brief to the Supreme Court supporting the HMOs.
The groundbreaking Texas law allowed two patients to bring malpractice cases against Aetna and CIGNA, when payment for prescription medication and hospital stays were denied and, as a result, the patients suffered harm. The Supreme Court upheld ERISA, and did not allow either of these patients to sue their HMOs for malpractice. The Supreme Court decision voids all of the state ERISA laws, ending our best hope for ERISA relief.
The Court held that HMOs are making financial (not medical) decisions, and, therefore, cannot be held liable for medical malpractice. The fact that the withholding of payment leads to the withholding of treatment did not impress the Court. According to the Court, “The fact that a benefits determination is infused with medical judgments does not alter this result.” The decision would appear to subject non-physicians who make medical judgments to less liability than physicians. Such reasoning seen in a clinical setting might be described as schizophrenogenic. The social costs of this decision are likely to be disastrous.
The physician class action suit accusing the insurance industry of violating RICO (Racketeer Influenced and Corrupt Organizations Act) laws takes on even more importance in light of the ERISA decision. ERISA does not protect the industry from the charges of conspiracy and racketeering. Ironically, Aetna and CIGNA are the two companies that have settled rather than face charges in court. One of the hallmarks of the settlements is a definition of “medical necessity” derived from the AMA definition, which rests squarely on clinical standards of care. Both of these Texas cases might have turned out differently under the terms of the settlements.
Physicians can use the RICO attorneys to dispute denials made by Aetna and CIGNA. As a signatory society, the American Psychoanalytic Association can represent its members in such disputes. Members who need help in filing a dispute, or who have other questions, can reach me at , or contact the RICO attorneys directly at .
Robert Pyles, M.D., is chair of the Committee on Government Relations and Insurance, and a former president of APsaA.