ERISA

1. Subject:      americans have no right to sue an HMO
From:         bob <b@b.ca>
Date:         1998/07/12
Message-ID:   <6o91pc$lu6$1@news.jump.net>
Newsgroups:   misc.consumers

July 11, 1998

Hands Tied, Judges Rule Law That Limits H.M.O. Liability

By ROBERT PEAR

WASHINGTON -- Federal judges around the country, frustrated by cases in
which patients denied medical benefits have no right to sue, are urging
Congress to consider changes in a 1974 law that protects insurance
companies and health maintenance organizations against legal attacks.

In their decisions, the judges do not offer detailed solutions of the
type being pushed in Congress by Democrats and some Republicans. But
they say their hands are tied by the 1974 law, the Employee Retirement
Income Security Act. And they often lament the results, saying the law
has not kept pace with changes in health care and the workplace.

The law, known as Erisa, was adopted mainly because of Congressional
concern that corrupt, incompetent pension managers were looting or
squandering the money entrusted to them. The law, which also governs
health plans covering 125 million Americans, sets stringent standards of
conduct for the people who run such plans, but severely limits the
remedies available to workers.

In a lawsuit challenging the denial of benefits, a person in an
employer-sponsored health plan may recover the benefits in question and
can get an injunction clarifying the right to future benefits. But
judges have repeatedly held that the law does not allow compensation for
lost wages, death or disability, pain and suffering, emotional distress
or other harm that a patient suffers as a result of the improper denial
of care.

Congress wanted to encourage employers to provide benefits to workers
and therefore established uniform Federal standards, so pension and
health plans would not have to comply with a multitude of conflicting
state laws and regulations.

The United States Court of Appeals for the Fifth Circuit, in New
Orleans, reached a typical conclusion in a lawsuit by a Louisiana woman
whose fetus died after an insurance company refused to approve her
hospitalization for a high-risk pregnancy. The woman, Florence B.
Corcoran, and her husband sought damages under state law.

In dismissing the suit, the court said, "The Corcorans have no remedy,
state or Federal, for what may have been a serious mistake."

The court said that the harsh result "would seem to warrant a
re-evaluation of Erisa so that it can continue to serve its noble
purpose of safeguarding the interests of employees."

In another case, Judge William G. Young of the Federal District Court in
Boston said, "It is deeply troubling that, in the health insurance
context, Erisa has evolved into a shield of immunity which thwarts the
legitimate claims of the very people it was designed to protect."

Judge Young said he was distressed by "the failure of Congress to amend
a statute that, due to the changing realities of the modern health care
system, has gone conspicuously awry," leaving many consumers "without
any remedy" for the wrongful denial of health benefits.

Disputes over benefits have become common as more employers provide
coverage to workers through H.M.O.'s and other types of managed care,
which try to rein in costs by controlling the use of services.

Here are some examples of the ways in which judges have expressed
concern:

- Judge John C. Porfilio of the United States Court of Appeals for the
10th Circuit, in Denver, said he was "moved by the tragic circumstances"
of a woman with leukemia who died after her H.M.O. refused approval for
a bone marrow transplant. But, he said, the 1974 law "gives us no
choice," and the woman's husband, who had sued for damages, is "left
without a remedy."

- The United States Court of Appeals for the Eighth Circuit, in St.
Louis, said the law protected an H.M.O. against a suit by the family of
a Missouri man, Buddy Kuhl, who died after being denied approval for
heart surgery recommended by his doctors. "Modification of Erisa in
light of questionable modern insurance practices must be the job of
Congress, not the courts," said Judge C. Arlen Beam.

- The United States Court of Appeals for the Sixth Circuit, in
Cincinnati, said that Federal law barred claims against a "utilization
review" company that refused to approve psychiatric care for a man who
later committed suicide. Because of Erisa, the court said, people who
sue an H.M.O. or an insurer for wrongful death "may be left without a
meaningful remedy."

- Federal District Judge Nathaniel M. Gorton, in Worcester, Mass., said
that the husband of a woman who died of breast cancer was "left without
any meaningful remedy" against an H.M.O. that had refused to authorize
treatment.

- Federal District Judge Marvin J. Garbis, in Baltimore, acknowledged
that a Maryland man may be left "without an adequate remedy" for damages
caused by his H.M.O.'s refusal to pay for eye surgery and other
necessary treatments. But, Judge Garbis said, whether Erisa should be
"re-examined and reformed in light of modern health care is an issue
which must be addressed and resolved by the legislature rather than the
courts."

- The United States Court of Appeals for the Ninth Circuit, in San
Francisco, ruled last month that an insurance company did not have to
surrender the money it saved by denying care to a Seattle woman, Rhonda
Bast, who later died of breast cancer.

"This case presents a tragic set of facts," Judge David R. Thompson
said. But "without action by Congress, there is nothing we can do to
help the Basts and others who may find themselves in this same
unfortunate situation."

Democrats and some Republicans in Congress are pushing legislation that
would make it easier for patients to sue H.M.O.'s and insurance
companies. If a doctor makes a wrong decision, he or she can be sued,
said Representative Charlie Norwood, Republican of Georgia, but
"H.M.O.'s are shielded from liability for their decisions by Erisa."

Changes in Erisa will not come easily. The Supreme Court has described
it as "an enormously complex and detailed statute" that carefully
balances many powerful competing interests. Few members of Congress
understand the intricacies of the law. Insurance companies, employers
and Republican leaders strenuously oppose changes, saying that any new
liability for H.M.O.'s would increase the cost of employee health
benefits.

Senator Trent Lott of Mississippi, the Republican leader, said today
that he had agreed to schedule floor debate on legislation to regulate
managed care within the next two weeks. Senator Tom Daschle of South
Dakota, the Democratic leader, who had been seeking such a debate, said
Lott's commitment could be "a very consequential turning point" if
Democrats have a true opportunity to offer their proposals.

But Senator Don Nickles of Oklahoma, the assistant Republican leader,
said, "Republicans believe that health resources should be used for
patient care, not to pay trial lawyers."

Proposals to regulate managed care have become an issue in this year's
elections, and the hottest question of all is whether patients should be
able to sue their H.M.O.'s.

The denial of health benefits means something very different today from
what it meant in 1974, when Erisa was passed. At that time, an insured
worker would visit the doctor and then, if a claim was disallowed,
haggle with the insurance company over who should pay. But now, in the
era of managed care, treatment itself may be delayed or denied, and this
"can lead to damages far beyond the out-of-pocket cost of the treatment
at issue," Judge Young said.

H.M.O.'s have been successfully sued. A California lawyer, Mark O.
Hiepler, won a multimillion-dollar jury verdict against an H.M.O. that
denied a bone marrow transplant to his sister, Nelene Fox, who later
died of breast cancer. But that case was unusual. Mrs. Fox was insured
through a local school district, and such "governmental plans" are not
generally covered by Erisa.

The primary goal of Erisa was to protect workers, and to that end the
law established procedures for settling claim disputes.

Erisa supersedes any state laws that may "relate to" an employee benefit
plan. Erisa does not allow damages for the improper denial or processing
of claims, and judges have held that the Federal law, in effect,
nullifies state laws that allow such damages.

The New York Times Company

2. Subject:      Re: HMOs suck!!
From:         magic2626@aol.com (Magic2626)
Date:         1998/06/29
Message-ID:   <1998062910064501.GAA13138@ladder01.news.aol.com>
Newsgroups:   alt.politics.usa.republican

There is a legal loophole that HMO's exploit: ERISA of 1974.

If an HMO denies treatment or surgery, and there is a breach of contract, bad
faith, or medical malpractice to give a few examples..... you could not sue for
any intentional torts in state court.

ERISA only allows a suit in Federal Court for the original treatment.

No jury allowed, just a judge.

No compensatory or punitive damages.

No lawyer will take such a case on contingency, since after 3 years of
litigation you can win only the original medical treatment.... so the lawyer
needs to be paid $30,000 to $200,000 to fight for your medicine. You might
succeed in later recovering some percentage of the fees.

Of course often by the time the medical treatment has been won..... the patient
is dead.... and doesn't need the lifesaving treatment any longer.

But the family cannot sue for the wrongful death.

The same scenario applies when the patient lives but loses body parts, suffers
paralysis or brain damage that the timely treatment would have likely prevented.

By the time the suit is won, the treatment is often no longer of any value.

Kind of like suing the Fire Department for water to extinguish the fire.... if
3 years later you win the water.... the house is burned to the ground already,
so you don't need the water.

SO, what does the HMO have to lose? Nothing but ethics. And since top CEO's at
HMO's can earn hundreds of millions of dollars every year they have a good life.

If they have nice homes, and their kids go to good schools.... why should they
worry about LOSERS? Customers of HMO's who get sick and need expensive
treatment, and are denied treatment and lose their houses, businesses,
families, life savings, and their lives..... HMO's say that  these people are
LOSERS and want nothing to do with them.

Hell , if they paid for patients treatments a $120 million dollar salary would
be hard to get.

HMO's want people who don't get sick, or who are happy with a phone call to a
nurse, or who take their denial of treatment nicely and JUST GO AWAY..... as
long as they keep up their payments.

Med-cheking: The only work that a psychiatrist can do with patients from most Managed Care Corporations. Usually it means 15 minutes sessions, code 90862, when the psychiatrist meets with the patient to review the psychiatric medication.

Groups and Networks: Entrepreneurs, some of them psychiatrists, have discovered that they can form professional groups and networks to offer the kind of services that Managed Care Corporations want, that is, the minimal services possible. In order to get their referrals they often lower their fees. They often "associate" with solo providers in a fee split scheme.

MCOs: Corporations that contract with health insurance to "manage" the money. That is to make it difficult for the money from premiums to be used in treatments so that they can go to the pockets of investors and CEOs.

Non participant provider: The private psychiatrist who doesn't sign a contract with a Managed Care Organization and as such is not a provider for the organization. Some Managed Care Corporations allow their patients to go out of network. The private psychiatrist has no limits in his fees and the managed care pays him less. Who carries the burden? The patient.

Single Payer System: A Health Care System where all citizens contribute and all have access. In Canada the system is decentralized to the Provinces and the doctors are not government employees. They have their private offices. The Canadian citizen, with his health card can choose and change doctors. The doctors bill to a single payer. The system is more efficient, offers universal access and is less expensive than in the USA.

Provider: Psychiatrist. Psychologist or Social Worker who signs a contract with a Managed Care Organization to offer services for insured patients. A lot of these patients can't afford private care. In some geographic areas many providers would not survive if they don't sign these contracts and treat MCO patients. There are Solo Providers and Group Providers.