The Supreme Court took up the long-running national dispute over managed health care Monday, saying it would decide whether workers and their families can sue their medical plans for providing allegedly substandard care.
The justices' ruling, due by next summer, will determine the legal rights of more than 130 million Americans who receive subsidized medical care through employer- or union-sponsored plans.
The high court agreed to hear a pair of cases from Texas. In the first, Juan Davila, a diabetes patient from Fort Worth, says he nearly died from internal bleeding after his health-care plan refused to pay for Vioxx, a pain medication ordered by his doctor, and insisted on a less-expensive generic version of the drug. In the second, Ruby Calad, from the Houston area, suffered complications after her health plan insisted she be sent home from the hospital a day after having a hysterectomy.
The Supreme Court will not decide the merits of their claims. Instead, the justices will rule whether the patients are free to sue their health plans for medical negligence.
When the 5th U.S. Circuit Court of Appeals in New Orleans cleared Davila and Calad to sue in a Texas state court, Aetna Health Inc. and Cigna HealthCare of Texas appealed, arguing that they are shielded from such lawsuits under a federal law that regulates employee benefits.
Since the early 1990s, managed-care networks have been charged with holding down medical costs. And as they have done so, patients have complained of being denied crucial treatments, tests or specialty care. In the most serious cases, patients have tried to sue their health-care plans -- only to learn that they were barred from taking such action under a quirk in a 1974 federal pension reform law.
That measure, the Employee Retirement Income Security Act, was designed to assure workers that they would receive the pensions and benefits they had been promised and established federal rules for the benefits. In return, employers won the assurance that the federal law would take precedence over all state laws or claims that "relate to" employee benefits.
In the mid-1980s, the Supreme Court ruled that this federal law prevented injured workers from suing to win damages in a state court. They could sue in federal courts, but only to "recover benefits due." This amount was often trivial. But in more recent rulings, the court has hedged and suggested that victims of medical negligence may sue for damages.
In the last year, two federal appeals courts have cleared the way for patients to sue their managed-care plans, leading to the latest showdown in the Supreme Court.
"This is about whether we get our day in court," said George Parker Young, the lawyer for the two Texas patients. He noted that in 1997, under then-Gov. George W. Bush, the Texas Legislature gave patients the right to sue their health plans in state court.
On the other side, the health insurance industry, the U.S. Chamber of Commerce, the National Assn. of Manufacturers and other business groups urged the court to block lawsuits against managed-care plans.
Allowing patients to sue their health plans "threatens the foundation" of the current benefit plans, they told the high court. Employers will reconsider sponsoring the plans if they can be sued, they said.
"Consumers and plan participants will pay the ultimate price -- facing higher co-payments, deductibles and premiums," they added.
Two years ago, the high court upheld a middle-ground reform that gave patients the right to seek a second opinion from outside experts if their plan denied a medical benefit or drug treatment that the patient's physician believed was necessary.
In a 5-4 decision, the court said the state "independent review" laws focused on medical care and did not conflict with the federal employee benefits. The four dissenters, however, said the state measures might force employers to pay for more benefits, and for that reason they conflicted with the federal benefits law.
That disagreement is likely to be renewed in February or March when the court hears oral arguments in the case of Aetna vs. Davila and Cigna vs. Calad.
Aetna's appeal was filed by Washington lawyer Miguel A. Estrada, whom President Bush nominated in 2001 to the U.S. Court of Appeals for the District of Columbia Circuit. Estrada withdrew his nomination this year after Democrats repeatedly blocked a final vote on his confirmation.
The justices took no action on a related case from New York in which Bonnie Cicio is suing her late husband's health plan for having denied a stem cell transfusion that might have saved his life. The court will likely act on that appeal after ruling on the two Texas cases.