Court sides with HMOs in denying patients' suits

By Anne Gearan
The Associated Press

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The unanimous decision invalidated an important part of patient-rights laws in several states, including Washington, and tossed a political hot potato back to Congress. Lawmakers have tried repeatedly and failed to pass national patient protections. The last and most promising effort foundered on a wronged patient's right to sue.

Health insurers argued that enormous jury awards drive up the cost of health care for everyone and might lead some employers to drop their health plans.

The Supreme Court ruled that HMOs are shielded from lawsuits in state courts, where juries are more apt to side with victims and order up multimillion-dollar judgments.

Relying on a federal pension-benefit law that predates the rise of managed care, the court said patients may pursue claims only in federal courts. There, awards are capped at the cost of medical services the HMO would not cover.

The ruling affects the 72 million people covered by HMOs. It applies to a gray area of medicine and insurance, in which decisions about treatment and coverage are mingled. The situation arises frequently in managed care, where doctors belong to a closed network overseen by administrators, who may decide what the company will pay for.

"By reserving the right to decide what is — and what is not — medically necessary, managed care plans can now practice medicine without a license, and without the same accountability that physicians face every day," the American Medical Association said.

The ruling would override a Washington state statute that allowed patients covered under an employer's health plan to sue for malpractice damages in state courts, said Carol Sureau, a staff attorney with the Washington Office of the Insurance Commissioner. Workers covered by self-insured employers, such as Boeing and Microsoft, were not covered by the state law and never had the option to sue in state court in the first place, Sureau said.

The justices rejected lawsuits filed by two Texas patients who claimed they suffered avoidable pain and complications because their HMOs pinched pennies. They brought suits under a Texas patients' rights law passed when President Bush was governor.

During the 2000 presidential contest, Bush took credit for the law. When the issue reached the Supreme Court, however, the Bush administration sided with insurers.

Juan Davila, who sued Aetna Healthcare, took what he claims was inferior pain medication instead of the Vioxx his doctor had recommended because Aetna Health would not pay for the more expensive drug. The cheaper medication caused bleeding ulcers, and he almost had a heart attack, he said.
 
"My life is not the same and may have been cut short because of the HMO's decision to play doctor," said Davila, a post-polio patient.

The Supreme Court heard his case alongside that of hysterectomy patient Ruby Calad, who claimed that Cigna Healthcare of Texas turned her out of a Houston hospital after only one day of recovery. The HMO would not pay for a longer stay, even though her doctor recommended it. She was back in the emergency room a few days later, suffering complications she claims could have been avoided had she remained hospitalized longer after surgery.

The Supreme Court did not decide whether Davila and Calad deserved better, only whether and where they could sue. Insurers and business groups had argued that the 1974 Employee Retirement Income Security Act, or ERISA, trumps state patient-protection laws that would allow patients to sue over allegedly negligent coverage decisions.

ERISA was supposed to protect worker benefits while guaranteeing employers uniform national rules and a streamlined process of handling lawsuits or complaints.

Calad and Davila could have brought their lawsuit under ERISA's rules but chose not to, Justice Clarence Thomas wrote for the court. Their lawsuits "are completely pre-empted by ERISA," he said.

In a statement after the ruling, Aetna called it a "reaffirmation of the law applicable to employer-sponsored health plans."

"By affirming the role of ERISA in employee benefits the court has helped to assure that millions of working Americans will continue to have access to quality health coverage provided by their employers," the insurer said.

Among other cases yesterday:

• Intel: The court ruled 7-1 that a U.S. judge has the power to force the world's largest computer chip-maker, California-based Intel, to turn over records to foreign regulators.

• Death penalty: The court refused to consider the appeal of a South Carolina death-row inmate convicted of killing two third-graders during a shooting spree in 1988. Mental-health groups had urged it to use Jamie Wilson's case to decide if it is unconstitutional for states to execute people who were seriously mentally ill when they committed crimes.

Seattle Times staff reporter Kyung Song contributed to this report.