Patients still waiting for legal rights.

Sharon Arkin graduated from college with a major in biology and biochemistry. She intended to embark on a career that involved pipettes, not pleadings. But while helping a friend catch up on his law school studies, she was bitten by the law bug and decided to get her paralegal certificate.

Arkin landed in Claremont, California, where she worked at a law firm by day and attended law school by night. She eventually made partner at the firm and, along the way, developed a specialty in insurance bad faith litigation and HMO liability.

That specialty brought Arkin--now with Robinson, Calcagnie & Robinson of Newport Beach, California--to Capitol Hill recently for a House Ways and Means subcommittee hearing on liability issues in managed care. The goal: to support meaningful patient protection legislation that will hold managed care fully responsible for decisions that harm patients.

Background of the bill

Hearings addressing similar issues were plentiful during the last Congress, before the House overwhelmingly passed the Norwood-Dingell bill (H.R. 2723) in 1999. That proposed legislation, which included no caps on damages, would have lifted Employee Retirement Income Security Act (ERISA) preemption of state laws, expanded patient protection to all Americans with private health insurance, and increased access to specialty care.

The House and Senate could not agree on the bill's language, so it never went beyond conference committee.

Bills pending in the 107th Congress--the McCain-Kennedy-Edwards bill (S. 283) on the Senate side and the Ganske-Dingell bill (H.R. 526) on the House side--are the products of negotiations that began in the waning days of the 106th. The bills are named for their cosponsors: John McCain (R-Ariz.), Edward Kennedy (D-Mass.), John Edwards (D-N.C.), Greg Ganske (R-Iowa), and John Dingell (D-Mich.).

The new bills would not cleanly lift ERISA preemption and simply allow actions in state court under state law. They would create a new federal cause of action and set up a bifurcated system of legal remedy.

Causes of action stemming from medically reviewable decisions would be handled in state court under the existing law of compensatory and punitive damages. Actions resulting from coverage- or contract-related decisions would remain in federal court, but remedies would be expanded to include full compensatory damages. Under the McCain-Kennedy-Edwards bill, punitive damages would not be available for these federal causes of action. Instead, the bill allows for a "civil penalty" of up to $5 million.

President George W. Bush clarified his views on patients' rights in a speech to the American College of Cardiology in March:

   I will insist any federal bill have reasonable caps on damage awards, and
   the caps in proposed legislation before Congress are too high.... Employers
   who decide up front they will not make medical decisions should not be
   required to go to court all the time to prove they were not involved in
   those decisions. And I will not support a federal law that subjects
   employers to new multiple lawsuits in 50 different states.

Some House Republicans who voted for the stronger version of the legislation in 1999 are now retreating from some of the liability issues that were included in it.

The House hearing

Rep. Nancy Johnson (R-Conn.), chair of the House Ways and Means Health Subcommittee, opened the April 24 hearing by saying, "I don't believe we can sue our way to better care."

Arkin, representing ATLA, was the first of five witnesses to testify. "We're not after more lawsuits," she said, urging Johnson not to restrict patients' rights in an attempt to protect insurance companies from accountability. "This is an industry that has people's lives in its hands."

Johnson expressed concern that employees will sue the employer sponsors of their health plans.

The drafters of the bill have already assuaged this worry by including language specifically stating that the bill authorizes a cause of action against the employer or other plan sponsor only if it participates directly in making the decision to deny health benefits.

The bottom line for Arkin and the other hearing participants is that insurers should be held responsible. "Insurers are involved in the decision-making stream," said Richard Corlin, president-elect of the American Medical Association (AMA). "They are not just the premium collectors. And [under current law] they are the only ones not held accountable."

Arkin warned that even if Congress amends ERISA to provide for managed care accountability, the industry might respond with a "subterfuge" that artificially places decision-making in the hands of others. "It should be made clear that even where the HMO is operating only as a third-party administrator, it may still be liable for unfair decisions," she said.

Arkin left the hearing room unscathed. Not so Corlin, who was hounded by at least three subcommittee members--including Bill Thomas (R-Cal.), the head of the Ways and Means Committee and a longtime champion of medical malpractice tort "reform"--about whether the AMA would support limits on medical negligence claims in the Patients' Bill of Rights.

Corlin explained that the AMA supports both tort "reform" and patients' rights legislation. "If we could get them together, we would attempt to do that. The information we've been given is that trying to link them would hurt the more achievable [patients' rights bill] at the present time."

Thomas believes there is "an area for compromise," but Corlin could make no promises of support for the endeavor. As the debate moves forward, however, the issue is likely to materialize.

Kristin Loiacono is media relations coordinator for ATLA.