Lawsuit Focuses on HMO’s Duty to Its Patients

The last time Aetna U.S. Healthcare squared off in court against Claremont attorney Michael Bidart, a jury came back with a record verdict of $120.5 million against the HMO.

On Friday, the adversaries began their rematch in a Los Angeles courtroom.

The issue is one being debated in Congress and statehouses across the country: Can health maintenance organizations hand off responsibility for medical care of their members and then avoid liability if something goes awry?

Bidart represents the family of Murray Rosenberg, a 79-year-old Aetna member and cancer patient who, the suit alleges, died after being discharged from a hospital prematurely and sent to a nursing home that didn’t treat him properly.

Aetna contends that Bidart’s suit is an unfair attack on the structure of managed care programs for the elderly.

“Obviously, everyone feels sympathy for the family for what they went through,” said Kirk Patrick, Aetna’s outside counsel, in opening arguments to the jury Friday. “But the system, the access to care that Aetna provided to him, did not fail Mr. Rosenberg.”

If Rosenberg’s family wins, it will send a powerful message that HMO contracts with doctors and hospitals don’t “absolve HMOs of legal responsibility for bad clinical outcomes,” said M. Gregg Bloche, a law professor at Georgetown University Law Center.

Large verdicts often are reduced on appeal. A San Bernardino jury’s award of $120.5 million to the family of a deceased cancer patient covered by Aetna was being appealed when Bidart settled the case for an undisclosed, presumably lower, amount.

But the initial headlines often are enough to send ripples through the industry, sometimes changing companies’ behavior.

“If you’re an HMO executive, you badly don’t want these cases to end up in court,” Bloche said. “Your worst nightmare isn’t the verdict; it’s the publicity.”

Most lawsuits against HMOs don’t make it to trial. Federal law bars patients from filing state court suits against HMOs for damages if they receive health benefits from a private employer. In addition, many HMOs in California require members to settle their disputes in binding arbitration.

In this case, Rosenberg’s family was not bound by those restrictions because he received his coverage through the federal Medicare program for the elderly. About 5 million people are enrolled in Medicare HMOs, which offer fewer choices for care but additional benefits such as prescription drug coverage.

The case is also unusual in that it is a dispute not over benefits denied but rather over the quality of the medical care Rosenberg received.

Rosenberg, who had multiple myeloma, a cancer of the bone marrow, was admitted to Citrus Valley Medical Center-Queen of the Valley campus in West Covina on Dec. 7, 1999, to begin chemotherapy. On Dec. 15, after his fourth chemotherapy session, Rosenberg was transferred from the hospital to Sunbridge, a skilled-nursing home in Covina.

Rosenberg’s nursing home stay was covered by his Aetna plan. The nursing home operator, Sun Healthcare Group, also was sued but settled its part of the case for $250,000; it did not acknowledge wrongdoing.

One of Bidart’s key allegations is that Rosenberg’s care was mishandled by a physician known as a hospitalist, a doctor who treats patients only while they are in the hospital.

The lawyer contends that the doctor discharged Rosenberg without consulting his treating doctors or his family.

“It’s outrageous,” said Rosenberg’s son, Haskell, who works for an insurance company. “As my family talked about it, we really believed that this [lawsuit] had to be done.... We had to take action.”

The lawsuit contends that the hospitalist had a financial incentive: He served as the acting medical director of the doctors group that contracted with Aetna, and the group stood to gain a bonus if it kept hospital costs under budget.

The hospitalist was included in the lawsuit, along with two physicians’ groups, but Bidart said he dropped them from the case to focus on Aetna.

In a deposition, the hospitalist maintained that he acted properly and that he had consulted with Rosenberg’s doctors.

At the nursing home, Rosenberg was not seen by a physician and did not receive all of the medications prescribed for him, Bidart alleged in his opening argument. Aetna claimed that he was seen by a physician there.

Both sides agree that Rosenberg’s condition deteriorated. He returned to the hospital Dec. 20 and died Jan. 1, 2000, of congestive heart failure.

Bidart claims that Rosenberg died prematurely, alleging that he was given a life expectancy of three to five years when the cancer was diagnosed.

Aetna maintains that Rosenberg was a sick man who had kidney problems, high blood pressure, heart disease and a long history of bronchitis infections.

Bidart won widespread attention for his last case against Aetna, on behalf of a widow who claimed that her husband died of cancer after being unfairly denied an experimental treatment. In awarding its $120.5-million verdict, a San Bernardino jury concluded that Aetna acted with “malice, oppression and fraud” and shortened the man’s life.

This time, according to Bidart, his case will expose how HMOs recruit Medicare patients to their name brand, then often cede total control to doctors and hospitals--without any oversight.

“In their mind, their job is over when they take the check in and sign the contract to delegate authority to someone else,” Bidart said before the trial.

Aetna officials say the company maintains broad oversight over its medical network but is not required to review every treatment decision. Every action it took related to its Medicare program was approved by federal regulators or governed by federal law, Aetna’s lawyers said.

“It’s pretty fair to say the responsibility for medical decisions should rest with the medical providers,” Aetna’s outside counsel, John Swenson, said this week. “The responsibility for coverage decisions, if we make them, should rest with us.”

By no means is Aetna alone in the way it structures its contracts. Many HMOs pay medical groups and hospitals a set amount per month to provide all the care required by patients. If the doctors and hospitals have money left over, they earn a profit. If not, they post a loss.

The former head of the U.S. Health Care Financing Administration, which oversees Medicare HMOs, said managed-care plans are trying to have it both ways. They say they offer added value for seniors, but also claim that they’re not accountable for care that takes place under their contracts.

“Their PR is all about better care,” said Bruce Vladeck, now a professor of health policy and geriatrics at Mount Sinai School of Medicine in New York. “If they’re going to claim to be providing better care ... then they’ve got to be ... accountable for it.”