Jury’s Verdict Is a Loud and Clear Message to HMOs

A Riverside jury last week sent the nation’s largest HMO, Aetna, a $120-million message: Human life is priceless and should not be sacrificed for money. The largest verdict ever against an HMO went to Yucaipa schoolteacher Teresa Goodrich, whose husband, a deputy district attorney, died of stomach cancer after a 2 1/2-year ordeal trying to get Aetna to approve cancer treatment recommended by his Aetna doctors. When it was clear David Goodrich could wait no longer, his doctors administered care without approval. Goodrich died believing he had left his wife with $750,000 in medical bills.

The jury’s message was that Aetna cannot ignore its own doctors’ recommendations and must act more quickly when a patient’s life hangs in the balance. In one instance, it took Aetna four months to approve high-dose chemotherapy; by then, it was too late to be of benefit to Goodrich. Company and industry standards establish a 24- to 48-hour turnaround time on such requests.

Did Aetna get the message? According to the Hartford Courant, Aetna CEO Richard Huber, responding to the verdict last week, said, “This is a travesty of justice. You had a skillful ambulance-chasing lawyer, a politically motivated judge and a weeping widow.”

Such remorseless defiance of civil dictates is all too characteristic of industry leviathan Aetna, which will insure one of every 10 insured Americans after its pending merger with Prudential. Reaction must be swift. Aetna’s board of directors should fire Huber for his remarks or risk leaving the impression that it does not recognize the true travesty of justice in its own system.

Aetna’s defense lawyers--the very ones who made the widow weep on the stand--faulted David Goodrich for breaking the HMO’s rules by taking treatment without approval. The verdict was a repudiation of a common HMO tactic of refusing to authorize treatment in a timely manner and then blaming the patient for doing what he or she must do to stay alive.

Federal regulators also should block Aetna’s pending merger with Prudential until it agrees to improve its authorization procedures. Thousands of doctors across the country have defected from Aetna because reimbursements do not allow them to provide quality care, including 600 San Mateo doctors who withdrew Jan. 1. If this merger is approved without guarantees about Aetna’s conduct, the new company would be in a position to downsize the level of care even further. This would mean that physicians would have few other places to go, particularly in markets like Houston, where Aetna-Prudential would cover more than half of the patients who have insurance through HMOs.

Finally, Congress must move swiftly to give patients who are insured by HMOs through private industry the same right to sue as government workers have. Under the federal Employee Retirement Income Security Act of 1974 (ERISA), patients with private-sector, employer-paid insurance can recoup only the cost of the benefit denied. This is clearly not good enough. If ERISA rules applied to bank robberies, convicted thieves would simply have to give back the money.

Evidence shows that ERISA’s shield of immunity has bolstered HMO arrogance. For example, an Aetna training film regarding claims procedures included one Aetna lawyer telling claims handlers, “As a practical matter, you really may have to do more on a non-ERISA plan to protect against some of the [legal] exposure we’re talking about.”

The video is the best direct evidence to date that, following the U.S. Supreme Court ruling in 1987 setting set up ERISA’s shield of legal immunity, Aetna became more callous toward policyholders. The company dropped its field investigation force, eliminated claims handling guidelines and increased its claims personnel caseloads four to 4.5 times the industry average. The burden of proving that a claim is payable shifted from the company to the disabled patient, who is often unable to properly document his or her own case.

Aetna’s indifference toward covering David Goodrich’s treatment had a price for taxpayers, too: $500,000 of the care ended up being paid for by the school district where Teresa Goodrich works as a kindergarten teacher.

Aetna CEO Huber said of the Goodrich verdict, “That’s no way to get justice and certainly no way to manage a trillion-dollar industry.” Aetna’s board of directors would do well to consider that it is precisely Huber’s attitude that the company is above justice that has gotten Aetna into trouble. Immediate amends are necessary.