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COURT DECISION IMPACTS NATIONWIDE HEALTH-CARE INDUSTRY; INSURANCE COMPANY USE OF MEDICAL CARE REVIEWS UPHELD

 COURT DECISION IMPACTS NATIONWIDE HEALTH-CARE INDUSTRY;
 INSURANCE COMPANY USE OF MEDICAL CARE REVIEWS UPHELD
 LOS ANGELES, April 20 /PRNewswire/ -- The following is being issued by Baker & McKenzie:
 A recent decision in a Los Angeles County Superior Court will impact the nationwide health-care industry, including health-care insurance providers, medical utilization review services, hospitals and physicians.
 The plaintiffs in Wilson v. Blue Cross of Southern California challenged the almost decade-long use of medical utilization reviews conducted by contractors to health-care insurance providers. These reviews result in recommendations on how long patients should remain hospitalized or whether costly medical procedures and tests should be understaken. These concurrent reviews take place when the patient is still in the hospital and have been generally considered by the health- care insurance industry as a major cost-containment measure. Since the patient's physician is involved in the reviews and can appeal a review service's determinations, the process also is viewed as a way to ensure that a patient receives quality service.
 On April 9, 1992, a Los Angeles County Superior Court jury returned a verdict in favor of Blue Cross of Southern California and Blue Cross and Blue Shield of Alabama and against the parents of Howard E. Wilson, a 25-year-old-man who was found dead on March 31, 1983, outside his ex- roomate's apartment.
 While not conclusive, the coroner's report suggested that Wilson's death was related to chronic drug abuse since the time he was 16 years old.
 On March 11 , 1983, Wilson was discharged from College Hospital, a psychiatric facility in Cerritos, Calif., where he had been hospitalized for 10 days for depression and drug abuse. The discharge apparently was prompted by a medical utilization review by Western Medical Review Inc., which was contracted by Blue Cross of Southern California to determine how long Wilson should remain hospitalized.
 Wilson's parents sued Blue Cross of Southern California, Blue Cross and Blue Shield of Alabama (Wilson's actual insurer who provided coverage through its interbank program with Blue Cross of California), and Western Medical Review. The Wilsons claimed that the insurers had no right to conduct such a review under their son's policy and that the review contributed to his death, which they believed was the result of suicide or a drug overdose.
 The case first attracted national attention on July 27, 1990, when the California Court of Appeal reversed an earlier order from a lower court dismissing the action. The dismissal order was based on the principle that the actual decision to discharge Wilson from the hospital had been made by his treating physician. By not contesting or appealing Western Medical Review's determination, Wilson's physician had agreed to the service's recommendation.
 By reversing the earlier order, the Court of Appeal changed the law by holding that insurers conducting medical reviews might be liable under certain circumstances for the death or harm to a patient discharged from a hospital, if the review caused a premature discharge and if the patient was harmed or died as a result.
 Since that appellate court decision, the current case has been followed closely by the health care industry -- physicians, hospitals and insurance companies alike -- because of the potential impact the current decision would have on the way health care providers and insurers provide protection.
 Gordon E. Bosserman, a partner in the Los Angeles office of the law firm of Baker & McKenzie, who represented Blue Cross of California, said, "The jury's decision is important because we live in a time of upward spiraling health care and insurance costs. The concurrent review of hospitalization while the patient is still in the hospital was developed as a means to contain those costs and to ensure the quality of the patient's care."
 Bosserman added, "Concurrent review protects the patient, who in earlier cases, might have found that after receiving hospitalization or undergoing expensive medical procedures, their benefits were totally or partially denied and they were left personally responsible for paying the costs. The decision affirms the validity of the concurrent process."
 Bosserman said it was unknown whether Wilson's parents would appeal this third decision. The Wilsons have approximately 60 days to make that decision.
 -0- 4/20/92
 /CONTACT: Nancy Suey Castles of Baker & McKenzie, 213-892-4948/ CO: ST: California IN: INS SU:


CH-AL -- LA024 -- 0136 04/20/92 14:10 EDT
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Date:Apr 20, 1992
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