Patients allowed to sue HMOs for injuries

Appeals process also part of the package

Texans are now the first in the country to have the right to sue their HMOs for malpractice, and there is a push to extend liability to managed care companies across the country.

George Bush Jr., Republican governor of Texas, allowed the bill to become law in May, opting not to sign or veto it. The law allows Texas HMO customers to sue over injuries that may have resulted from the company’s denial of treatment or delayed treatment. Bush had suggested he might stand in the way of the bill because he feared an explosion of lawsuits and an attendant rise in the costs of health care. His fears were assuaged by an amendment that requires "an independent review panel to assess the merits of a potential case before a lawsuit is filed." The panel will be created by the government with input from the providers.

In addition to being able to sue for delayed or denied treatment, Texans will be allowed to appeal HMO decisions to independent review groups. Managed care companies had opposed the measure vigorously, saying it would expose them to a huge number of malpractice lawsuits. Some companies predicted that they would challenge the validity of the law in court, but none has done so.

Accountability Act has 20 sponsors

Texas won’t be alone in making HMOs responsible for malpractice if four Democratic House members have their way. The Managed Care Plan Accountability Act of 1997 was introduced recently by Reps. Pete Stark (D-California), ita Lowey (D-New York), George Miller (D-California), and Dale Kildee (D-Michigan). The bill has 20 Democratic cosponsors.

The bill would prevent health plans from using the 1974 Employee Retirement Income Security Act (ERISA) to escape liability for decisions that deny or withhold medical care. If passed, the bill would create a new federal cause of action under ERISA. The current law exempts employer- sponsored health plans — including HMOs — from liability for medical decisions made as a result of plan guidelines or requirements. The bill would amend a section of the ERISA law so patients could sue for actions that are medically negligent and prompted by efforts to contain costs. The patient could seek actual and punitive damages in either state or federal court.

Physicians would be protected, however. A provision of the bill indemnifies physicians against lawsuits if their decision not to recommend a certain treatment was based on the health plan’s restrictions.

ERISA has been seen as a major obstacle to patients seeking to sue for malpractice, because the federal statute preempts many state laws. Since about 75% of Americans are now in a managed care plan, the bill’s sponsors say it is an attempt to restore the rights they had before the dramatic increase in managed care.