Lawsuit May Humble HMOs

The more I’ve covered legislative deliberations on insurance and legal issues in Sacramento, the more the lawmakers have come to seem like pawns manipulated by the lobbyists.

Gradually, I’ve concluded that the lobbyists are the most important players. Greatly empowered by their ability to make campaign contributions, they call the shots, and when I want to find out what is going to happen, usually I ask them.

That’s the case with California’s health care too. And it seems to be true in Washington as well.

Thirteen years after Congress adopted the Employee Retirement Income Security Act of 1974, or ERISA, the courts ruled that it preempted the states’ ability to pass laws allowing patients receiving employer benefits to recover damages against HMOs.

It’s become all too evident that the lawmakers can’t be relied upon to get that reversed, despite rising public sentiment that the HMOs must be held accountable.

Indeed, efforts in Congress to guarantee patients’ rights have gone nowhere. Meanwhile, legislation in Sacramento for independent review of HMO treatment decisions is so weak, it is opposed by consumer groups.

So, if the balance of power is going to shift from the HMOs to patients--and their conscientious doctors--it is probably going to come through new, imaginative lawsuits.

That’s where the Madison Scott case may come in.

Madison Scott is a 21-month-old girl living with her parents on the Central Coast. She is blind and will remain so the rest of her life.

Born prematurely at St. Joseph Hospital in Orange, she was afflicted by retinopathy of prematurity, an eye disease that can be a byproduct of the treatment premature babies receive.

ROP occurs in up to a third of preemies who survive. But total blindness is the outcome for only a small minority of this third. ROP can be successfully treated in most cases, if it is detected early enough.

The lawsuit brought by attorney Mark Hiepler of Oxnard alleges that professional negligence prevented Madison from obtaining such timely treatment.

Among the suit’s allegations are these:

* Orange County ophthalmologist Florencio Ching wrote on a hospital report Oct. 1, 1996, that reexamination was important and should take place in 10 days to two weeks (or no later than Oct. 14). However, he didn’t show up then, and no reexamination took place until Nov. 26.

* St. Joseph Hospital did not apprise Madison’s parents of the seriousness of the situation.

* There were delays of several days by St. Joseph Medical Group in approving examinations, and by the medical group and Cigna HealthCare in approving emergency surgery that finally began Dec. 6, 1996. Several surgeries were performed, but they were too late to prevent blindness.

“Altogether, we had eight weeks of delays, and during most of this time, we weren’t even told time was important,” says Madison’s father, Curt Scott.

Although California has a $250,000 limit on malpractice awards, that applies to pain and suffering. In Madison’s case, economic damages could run into millions of dollars more.

But probably the most important thing about this lawsuit is the theory that attorney Hiepler, who has won several major lawsuits against HMOs, is trying to pursue against Cigna to get around the ban on lawsuits under the federal ERISA statute.

He hopes to show that Cigna was negligent in approving as part of its network doctors like Ching, and was responsible for payment arrangements rewarding doctors for not rendering treatment.

In so-called “capitation” arrangements, HMOs pay doctors an average amount for all patients, regardless of the treatments they prescribe. The more treatments, the less profit for the physicians.

If Hiepler’s arguments prevail, the ERISA exemption may be largely swept aside.

In that respect, the biggest target of the Scott lawsuit is Cigna.

I wonder whether, in advertising so effectively to kill off President Clinton’s proposed national health care system five years ago, the industry realized it was putting itself in such a hot seat.

When the defendants and their attorneys were contacted for their views on the issues in the Scott case, two attorneys, plus representatives of Cigna, were responsive.

They all contested the complaint on factual grounds, saying the Scotts missed an appointment with Ching on Nov. 12 that could have interrupted the spiral toward Madison’s blindness.

The Scotts insist that the appointment was not approved. The defense attorneys say the Scotts were told Nov. 8 that it was approved. That is obviously a matter that will be resolved at the trial.

Cigna HealthCare of Southern California made its chief medical officer, Dr. Chuie L. Yuen, available, and she described an elaborate procedure whereby Cigna exerts great diligence in choosing its doctors and in reviewing them for retention every two years.

Although Yuen gave no statistics on what percentage are ever rejected, the Cigna presentation was going quite well until the firm’s PR man, Jim Harris, remarked that Cigna, like all HMOs, is diligently regulated by the state Department of Corporations.

I had to smile at that. The Department of Corporations is notorious for its weak regulation.

Harris also released a statement defending the ERISA exemption against damage claims.

“Changing ERISA would be a drastic disruption of the U.S. system of employee benefits . . . and could lead employers to decide they cannot or will not provide health care benefits to their employees,” it said. “This would leave many individuals without any health care coverage.”

Hmmm, I thought. The HMOs don’t know what thin ice they are on. If public antipathy to them rises much higher, even Congress and the Legislature might act against them, despite their lobbyists.

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Kenneth Reich can be contacted with your accounts of true consumer adventure at (213) 237-7060, or by e-mail at ken.reich@latimes.com