How the Decision Affects Patients
The Supreme Court’s ruling Monday that severely limits some consumers’ ability to sue their health insurers was hailed by the industry as a big step toward holding down healthcare costs and decried by consumer advocates as an impingement on patients’ rights.
Here are answers to questions consumers might have about the decision.
Question: What does the ruling mean?
Answer: It means that many HMO members cannot sue their health plans in state courts for denying treatment. California is one of 10 states that had enacted laws allowing HMO members to sue health plans over treatment denials. Those state laws are essentially wiped out by this ruling.
Q: On what basis did the court rule?
A: The court held that a 1974 federal law known as the Employee Retirement Income Security Act pre-empts lawsuits. Under ERISA, HMO members must take grievances directly to the HMOs themselves. Some of those HMO decisions may be appealed to federal courts, but awards are limited to the amount of the coverage in dispute and attorneys’ fees -- without any compensation for pain and suffering or punitive damages.
Q: Is this a victory for HMOs or consumers?
A: It depends on whom you ask. HMOs say that consumers win because their premiums won’t rise because of the costs of litigation and large damage awards. Consumer advocates and the American Medical Assn. say the ruling eliminates the ability of patients and doctors to hold HMOs accountable for their treatment decisions.
Q: What happens to cases already in court?
A: Four suits filed under the California Managed Health Care Insurance Accountability Act have made it to appellate courts. Any still pending will be subject to review under the new standard established by Monday’s Supreme Court ruling.
Q: Does this mean patients can’t sue for malpractice?
A: No. Monday’s decision does not directly involve claims of malpractice by a doctor. In general, patients remain free to sue physicians for their alleged mistakes.
Q: Does this block all lawsuits over insurance payments?
A: No. It applies only to HMO coverage provided by a private employer. People who buy their own HMO coverage or obtain it through a job in government or with a religious institution are not affected. The ruling also does not affect people in Medicare HMOs, who may sue their plans and recover punitive damages, as well as compensation for pain and suffering.
Q: What recourse do affected HMO members have now?
A: In 42 states, including California, HMO treatment decisions are still subject to independent review. In California, HMO members may appeal a treatment denial to the state Department of Managed Health Care.
Q: How does that work?
A: The department submits the dispute to an independent panel of doctors for review. The physicians on the panel review medical records, supporting documents from physicians and the HMO’s denial record. Panels usually decide within 30 days. Urgent cases can be resolved in five to nine days. By law, the HMO must abide by the decision.
Q: How often do patients win?
A: In 2001, the first year for the independent reviews in California, the panels sided with patients in 228 of 382 cases. In 2002, panels agreed with patients 242 of 689 times. In 2003, patients won 280 of 731 disputes.
