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By LISA GREENE, Times Staff WriterIn a 9-0 ruling, justices rule that patients can't sue managed care providers for failing to pay for recommended treatment.
In a significant victory for managed care, the U.S. Supreme Court ruled Monday that patients cannot sue HMOs for major damages when insurers refuse to pay for recommended medical treatment.
Consumer advocates said the 9-0 decision gives HMOs wider discretion to deny medical care. They called on Congress to pass a national patients' bill of rights.
"Lawsuits are a key to keeping the big boys honest," said Joan Claybrook, president of the advocacy group Public Citizen. "This decision essentially locks the courthouse doors to consumers."
But insurance industry officials and employer groups said restricting large lawsuits will hold down health insurance costs.
"This is a victory for health care consumers and employers," said Susan Pisano, vice president for America's Health Insurance Plans. "The cost of litigation is placing a very heavy burden on employers and consumers. And encouraging more lawsuits would have unnecessarily put coverage for more workers at risk."
Monday's decision does not address malpractice claims: Patients can still sue physicians for alleged mistakes. The ruling also doesn't apply to individuals who buy their own health care coverage or to government workers.
The court ruled that claims against employer-based health plans for denying treatment are governed by a 1974 federal law, the Employee Retirement Income Security Act, or ERISA.
That means instead of pursuing multimillion-dollar lawsuits for malpractice in state court, consumers must file much more restrictive lawsuits in federal court.
Under ERISA, patients would be able to recover only the cost of the denied treatment.
In other words, if a woman is dying of breast cancer because her insurer denied her a mammogram, she can't sue for wrongful death, but only for the cost of the mammogram itself, said West Palm Beach lawyer Theodore Leopold, who specializes in managed care suits.
"I can guarantee you there are champagne bottles being opened in the boardrooms of the managed care companies this afternoon," he said.
Others disagreed.
Allowing such suits would also raise costs for employers because they would have to design different health plans in every state, tailored to different court decisions, said Paul Dennett, vice president for health policy at the American Benefits Council, a group that represents large companies on health and benefits legislation.
Patients who have treatment denied still can appeal, both to their managed care plan and often to an outside reviewer, Dennett pointed out.
In Florida, patients appeal through their plan and then to a panel set up by the state's Agency for Health Care Administration.
"Many times these can be (resolved) with a phone call," he said. "While many people think of remedies as being the financial remedies available through state court, the most important remedy is to get the right care at the right time."
Monday's ruling stemmed from two Texas cases in which patients filed suit after their insurers refused treatment.
In one case, the man's doctor prescribed Vioxx for his arthritis pain, but Aetna Health Inc. refused to pay. The patient, Juan Davila, took a generic drug instead, and was hospitalized with bleeding ulcers.
In the other case, Ruby Calad had a hysterectomy, and her doctor recommended she stay in the hospital. But a nurse for her plan, CIGNA Healthcare of Texas Inc., said she should be discharged. Calad said she suffered complications because she was sent home.
The 5th U.S. Circuit Court of Appeals sided with the patients, but the Supreme Court reversed the decision.
The patients filed suit under the 1997 Texas patients' bill of rights law, the first law in the nation to explicitly allow people to sue managed care plans if they were denied coverage.
After efforts to pass a national bill stalled in Congress, nine other states passed laws similar to Texas': Arizona, California, Georgia, Maine, New Jersey, North Carolina, Oklahoma, Washington and West Virginia.
Meanwhile, national groups criticized President Bush for pointing to the Texas law while campaigning in favor of a national patients' bill in 2000, but opposing it to the Supreme Court.
"He said it ought to be the model for the nation," said Carlton Carl, spokesperson for the Association of Trial Lawyers of America. "It's the ultimate flip-flop."
Carl and other advocates said they will renew efforts to get Congress to pass a national patients' bill.
- Times researcher Kitty Bennett contributed to this report, which used information from Times wire services.