FIG1 The patients' rights
movement suffered a severe setback last month when the U.S. Supreme Court
ruled unanimously that patients do not have a right to sue their HMO in state
court, even if they suffered harm as the result of a decision the HMO made
about their medical care.
Renée Binder, M.D.: "The decision is a blow to the cause of
The Court sided with the insurance and managed care industries, which
argued that the 1974 federal Employment Retirement Income Security Act,
commonly referred to as ERISA, limited lawsuits by insurance beneficiaries to
federal courts only. Patients' rights advocates objected to this
interpretation because federal courts limit the amount of monetary damages
plaintiffs can receive in ERISA-based suits, since patients are barred from
suing for compensatory damages and limited to recovery of the insurance
"The decision is a blow to the cause of patients' rights," said
Renée Binder, M.D., past chair of the APA Committee on Judicial Action."
Managed care organizations ended up the winners" and will
continue to have the power to decide which medical treatments they will pay
for and which they will refuse to cover.
APA had joined the AMA and the Texas Medical Association (the suits
originated in Texas) in an amicus curiae brief on behalf of the two patients
who filed suit. The briefs called on the Court to rule that health plans can
be held liable for what is essentially malpractice in the same way physicians
Lawsuits brought by two health plan beneficiaries were combined when they
reached the Supreme Court level, since the key issue was identical, though the
details of the cases varied (Psychiatric News, March 5).
In one suit a patient sued Aetna Health Inc., and in the other the
defendant was Cigna Healthcare of Texas. In the former case, the insurer
substituted a prescription drug for the one chosen by the patient's physician,
and serious medication-related side effects ensued. In the latter case, the
patient allegedly suffered harm when the insurer overruled a physician's
judgment on the required length of a hospital stay in conjunction with a
The two patients sued under the terms of the Texas Health Care Liability
Act, a powerful piece of patients' rights legislation that became law in 1997,
though then-governor George W. Bush declined to sign the bill. The law grants
patients the right to sue in state court when they maintain that their health
plan made a medical-necessity decision that resulted in harm. The law, along
with those in nine other states, equates such cases with medical-malpractice
ones, which are the jurisdiction of state courts.
Ironically, though Bush cited this bill during his 2000 presidential
campaign as evidence of his strong support for patients' rights, his
administration joined the insurance industry in urging the high court to rule
against the Texas law's legitimacy.
ERISA placed employee benefit programs within the purview of the federal
government so that companies that operate in more than one state would not be
subject to a variety of laws and regulations. It was enacted long before
managed care was a gleam in insurers' eyes and was designed to cover just
pension benefit plans.
In the ensuing decades HMOs and other health plans came to rely on ERISA to
protect them from lawsuits based on what they contend are coverage-related
rather than medical-necessity decisions. The Supreme Court has now validated
"Almost everyone in our society who commits a negligent act can be
held responsible for the consequences of his or her negligence," said
Paul Appelbaum, M.D., chair of the APA Council on Psychiatry and Law and
former APA president. "Among the few exceptions are insurers and HMOs,
who have been insulated from liability by the Court's interpretation of the
federal ERISA law."
He emphasized that "potential liability for negligence is usually
thought of as providing an incentive to people and organizations to behave
reasonably, so as not to harm others. HMOs and other insurers continue to face
no deterrent to arbitrary denials of payment for care."
Karen Ignani, president and CEO of America's Health Insurance Plans, the
trade organization that represents the managed care industry, hailed last
month's ruling as "a victory for consumers and employers who otherwise
faced the prospect of higher health care costs without added benefit. The
ruling puts the brakes on efforts by trial lawyers to turn every question
about the scope of an individual's coverage into a costly lawsuit."
Families USA, a nonprofit organization that advocates on behalf of health
care consumers, had a very different take from Ignani on the ruling's
implications. Its executive director, Ron Pollack, said the decision "is
a big step backward for insured patients seeking quality care."
Pollack stated that it "takes HMOs off the hook from any liability
when they deny needed health care—even when improper denials have tragic
The high court's June 21 decision stemmed from a ruling by the 5th Circuit
Court of Appeals that in enacting ERISA Congress's intent was to protect
beneficiaries from having insurers breach the terms of benefit contracts.
Congress did not see ERISA as a way to preempt state-level lawsuits arising
from allegations of negligent care on the part of health plans, the appeals
court ruled in upholding the Texas law.
The decision inAetna Health Inc., fka Aetna U.S.
Healthcare Inc. et al. v. Davila[No. 02-1845] andCigna Health-Care of Texas v. Calad[No. 03-83] is posted online