Supreme Court limits patients' right to sue HMOs.

A unanimous Supreme Court dealt a blow to patients' rights with its recent ruling that consumers cannot sue their employer-sponsored managed health care plans in state court for refusing to pay for medical treatment. (Aetna Health, Inc. v. Davila, Nos. 02-1845, 03-83, 2004 WL 1373230 (U.S. June 21, 2004).)

The insurance industry lauded the decision, but plaintiff attorneys and doctors' groups expressed disappointment, noting the adverse effect it would have on the rights of millions of people covered by HMOs to seek compensation when they are injured by a plan administrator's decision to delay or deny medical treatment.

"This decision takes away the rights of states to protect their own citizens, and it takes away any recourse injured patients have to hold their HMOs responsible for bad medical decisions," said David Casey, ATLA immediate past president. "Medical decisions should be left to doctors, not insurance executives who make a buck every time they deny a legitimate claim."

In a statement released after the decision, John Nelson, president of the American Medical Association, noted that the Court's action "significantly erodes patients' ability to obtain medically necessary care by placing patients at the mercy of managed care plans that play doctor."

Both defendants in the case--Aetna Health, Inc., and Cigna Healthcare-announced that they were "pleased" with the result.

The ruling settled a question that had been vexing lawyers and judges for decades: Did Congress intend to prevent patients from suing their managed care insurers in state court--effectively denying patients the right to recover for injuries caused by an insurer's coverage decisions--when it passed the Employee Retirement Income Security Act (ERISA) 30 years ago? (See Jean Hellwege, Supreme Court Wades Into ERISA's "Serbonian Bog" Again, TRIAL, Jan. 2004, at 12.)

That was indeed Congress's intent, the Court said, finding that the civil enforcement provisions Congress wrote into the act completely preempted state tort claims. "If a participant or beneficiary believes that benefits promised to him under the terms of the plan are not provided, he can bring suit seeking provision of those benefits," wrote Justice Clarence Thomas for the Court. "A participant or beneficiary can also bring suit generically to 'enforce his rights' under the plan, or to clarify any of his rights to future benefits."

But neither of those remedies would have helped the plaintiffs in the case before the Court, said their lawyer; George Parker Young of Fort Worth, Texas. Both plaintiffs suffered debilitating physical injuries when HMO plan administrators refused to cover medical treatment prescribed by their doctors, Young said. All they could have gained from an ERISA claim was an award of the cost of the denied benefits or a decision mandating that their HMO provide them. The first remedy would not have come close to compensating the plaintiffs for their injuries, Young said, and the second remedy was moot--the medical care that had been denied was no longer needed.

According to court documents, the first plaintiff, Juan Davila, received a prescription for the arthritis pain medication Vioxx, but Aetna refused to pay for it unless he tried two cheaper drugs first. Both carried a higher risk of gastrointestinal bleeding. Three weeks after taking one of the cheaper drugs, Davila was rushed to the hospital with bleeding ulcers. He now cannot take any oral pain medication.

The second plaintiff, Ruby Calad, underwent a hysterectomy and was told by Cigna that the plan would only pay for a one-day hospital stay. Calad was discharged from the hospital against her doctor's recommendations and returned a few days later suffering post-surgical complications that required emergency treatment.

In both cases, Young said, ERISA's remedies would have done little to make his clients whole. "In your best day in court--say, in Ruby's case, she needed a couple more days in the hospital to heal up--that's the best you get: the cost of two more days in the hospital. That's no remedy," he said.

Davila and Calad sued their HMOs under a 1997 Texas patients' rights law that allows health care consumers to sue their HMOs for negligence--specifically, failing to meet a "duty of ordinary care"--when making coverage decisions. Texas was the first state to pass patient's rights legislation, but since then, 10 others--Arizona, California, Georgia, Maine, New Jersey, North Carolina, Oklahoma, Oregon, Washington, and West Virginia--have enacted similar laws. The Supreme Court's decision, which struck down the part of the Texas law that allowed negligence claims against HMOs, will have the same effect on the other states' laws.

In a concurring opinion, Justice Ruth Bader Ginsburg, joined by Justice Stephen Breyer, suggested Congress needed to fix the "regulatory vacuum" created by ERISA. "A series of the Court's decisions has yielded a host of situations in which persons adversely affected by ERISA-proscribed wrong doing cannot gain make-whole relief.... Fresh consideration of the availability of consequential damages under [ERISA] is plainly in order," Ginsburg wrote.

Congress failed to pass a federal patients' rights bill two years ago when negotiations broke down over whether the law should include caps oil damages recoverable by injured patients. Young said the Supreme Court's decision will increase pressure on Congress to revisit the issue and that his clients are ready to fight for their right to sue.

"Juan and Ruby have indicated to me that they plan to become advocates in urging the White House and Congress to fix this. Clearly, this is not anything that was ever really intended by Congress back in the early 1970s when they passed ERISA," Young said. "This is an unjust result, and Congress needs to fix it."