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Universal Coverage: How to Get There
Last month, I discussed the universal health coverage proposals offered by the presidential candidates. Now let's look at two areas that could help us figure out how to get there: universal health care systems in other countries, and how America's one universal coverage-type program—Medicare—came about.
Earlier this year, PBS broadcast “Sick Around the World” as part of its “Frontline” series, focusing on the health care systems in the United Kingdom, Taiwan, Germany, Japan, and Switzerland. Taiwan's system is based on the Canadian-style national health insurance model, in which private practices are paid by the government; the United Kingdom is the paradigm for the socialized medicine model, in which physicians are salaried government employees; and the other three systems are based on the German model, in which workers pay into “sick funds” to receive coverage from private insurers, and those who can't afford to pay are subsidized by the government.
These plans function fairly well, and their citizens don't pay for health care (at least not directly, though the taxes in these countries are considerably higher than in ours). Insurers are not expected to make a profit.
Whatever the system, each country's premise is the same: Everybody has a right to health care. The money to correct what ails the U.S. system (an estimated $100 billion) is the equivalent of how much the government is spending in half a year in Iraq, according to Princeton University economist Uwe Reinhardt, Ph.D.
But how would we convince Americans that health care for all is worth the cost? Some clues might be found in considering the way in which another costly health program—Medicare—advanced through the halls of Congress. Opposition was everpresent (particularly from organized medicine via the American Medical Association), and it took 8 years and 80 revisions from the introduction of the original bill in 1957 until Medicare became law in 1965.
The preamble to a piece of congressional legislation, the 1966 Comprehensive Health Planning Act, states, “The fulfillment of our natural purpose depends on promoting and assuring the highest level of health attainable for every person.”
Once all parties signed on to the idea that seniors needed help in paying medical bills, the question became which mechanism to use—government subsidies, direct government payments, or health insurance financed and administered through Social Security. The latter option prevailed, but these options all sound familiar to what we hear from our presidential candidates today regarding universal coverage.
This pundit has another suggestion: Why not provide a basic layer of health protection for all Americans funded with taxpayer dollars, with any additional coverage paid for by the individual, the employer, or both through the private sector? In this way, every citizen will be guaranteed a certain level of health care, while letting market forces take care of levels of health care above a certain floor. This represents a blending of what presidential candidates Sen. John McCain (R-Ariz.) and Sen. Barack Obama (D-Ill.) have advocated.
If there is a recognition that Americans are entitled to health care, Sen. Obama and Sen. McCain would do well to learn from the past endeavors that made Medicare possible and from the programs that exist in other countries. If we fail to learn from history, we are bound to make the same mistakes. Our nation can ill afford to make these mistakes when we consider the present state of the crisis in availability and accessibility of health care in our country today.
Last month, I discussed the universal health coverage proposals offered by the presidential candidates. Now let's look at two areas that could help us figure out how to get there: universal health care systems in other countries, and how America's one universal coverage-type program—Medicare—came about.
Earlier this year, PBS broadcast “Sick Around the World” as part of its “Frontline” series, focusing on the health care systems in the United Kingdom, Taiwan, Germany, Japan, and Switzerland. Taiwan's system is based on the Canadian-style national health insurance model, in which private practices are paid by the government; the United Kingdom is the paradigm for the socialized medicine model, in which physicians are salaried government employees; and the other three systems are based on the German model, in which workers pay into “sick funds” to receive coverage from private insurers, and those who can't afford to pay are subsidized by the government.
These plans function fairly well, and their citizens don't pay for health care (at least not directly, though the taxes in these countries are considerably higher than in ours). Insurers are not expected to make a profit.
Whatever the system, each country's premise is the same: Everybody has a right to health care. The money to correct what ails the U.S. system (an estimated $100 billion) is the equivalent of how much the government is spending in half a year in Iraq, according to Princeton University economist Uwe Reinhardt, Ph.D.
But how would we convince Americans that health care for all is worth the cost? Some clues might be found in considering the way in which another costly health program—Medicare—advanced through the halls of Congress. Opposition was everpresent (particularly from organized medicine via the American Medical Association), and it took 8 years and 80 revisions from the introduction of the original bill in 1957 until Medicare became law in 1965.
The preamble to a piece of congressional legislation, the 1966 Comprehensive Health Planning Act, states, “The fulfillment of our natural purpose depends on promoting and assuring the highest level of health attainable for every person.”
Once all parties signed on to the idea that seniors needed help in paying medical bills, the question became which mechanism to use—government subsidies, direct government payments, or health insurance financed and administered through Social Security. The latter option prevailed, but these options all sound familiar to what we hear from our presidential candidates today regarding universal coverage.
This pundit has another suggestion: Why not provide a basic layer of health protection for all Americans funded with taxpayer dollars, with any additional coverage paid for by the individual, the employer, or both through the private sector? In this way, every citizen will be guaranteed a certain level of health care, while letting market forces take care of levels of health care above a certain floor. This represents a blending of what presidential candidates Sen. John McCain (R-Ariz.) and Sen. Barack Obama (D-Ill.) have advocated.
If there is a recognition that Americans are entitled to health care, Sen. Obama and Sen. McCain would do well to learn from the past endeavors that made Medicare possible and from the programs that exist in other countries. If we fail to learn from history, we are bound to make the same mistakes. Our nation can ill afford to make these mistakes when we consider the present state of the crisis in availability and accessibility of health care in our country today.
Last month, I discussed the universal health coverage proposals offered by the presidential candidates. Now let's look at two areas that could help us figure out how to get there: universal health care systems in other countries, and how America's one universal coverage-type program—Medicare—came about.
Earlier this year, PBS broadcast “Sick Around the World” as part of its “Frontline” series, focusing on the health care systems in the United Kingdom, Taiwan, Germany, Japan, and Switzerland. Taiwan's system is based on the Canadian-style national health insurance model, in which private practices are paid by the government; the United Kingdom is the paradigm for the socialized medicine model, in which physicians are salaried government employees; and the other three systems are based on the German model, in which workers pay into “sick funds” to receive coverage from private insurers, and those who can't afford to pay are subsidized by the government.
These plans function fairly well, and their citizens don't pay for health care (at least not directly, though the taxes in these countries are considerably higher than in ours). Insurers are not expected to make a profit.
Whatever the system, each country's premise is the same: Everybody has a right to health care. The money to correct what ails the U.S. system (an estimated $100 billion) is the equivalent of how much the government is spending in half a year in Iraq, according to Princeton University economist Uwe Reinhardt, Ph.D.
But how would we convince Americans that health care for all is worth the cost? Some clues might be found in considering the way in which another costly health program—Medicare—advanced through the halls of Congress. Opposition was everpresent (particularly from organized medicine via the American Medical Association), and it took 8 years and 80 revisions from the introduction of the original bill in 1957 until Medicare became law in 1965.
The preamble to a piece of congressional legislation, the 1966 Comprehensive Health Planning Act, states, “The fulfillment of our natural purpose depends on promoting and assuring the highest level of health attainable for every person.”
Once all parties signed on to the idea that seniors needed help in paying medical bills, the question became which mechanism to use—government subsidies, direct government payments, or health insurance financed and administered through Social Security. The latter option prevailed, but these options all sound familiar to what we hear from our presidential candidates today regarding universal coverage.
This pundit has another suggestion: Why not provide a basic layer of health protection for all Americans funded with taxpayer dollars, with any additional coverage paid for by the individual, the employer, or both through the private sector? In this way, every citizen will be guaranteed a certain level of health care, while letting market forces take care of levels of health care above a certain floor. This represents a blending of what presidential candidates Sen. John McCain (R-Ariz.) and Sen. Barack Obama (D-Ill.) have advocated.
If there is a recognition that Americans are entitled to health care, Sen. Obama and Sen. McCain would do well to learn from the past endeavors that made Medicare possible and from the programs that exist in other countries. If we fail to learn from history, we are bound to make the same mistakes. Our nation can ill afford to make these mistakes when we consider the present state of the crisis in availability and accessibility of health care in our country today.
Has the Time Come for Universal Coverage?
With Sen. Edward M. Kennedy (D-Mass.), a staunch supporter of patient rights and health care, now battling brain cancer, the subject of health care in our nation becomes all the more poignant. In a two-part series, we will consider this important issue.
Our present health care system is broken, and we need an updated model. A March 17, 2008, Fortune magazine article reported that the United States now has 47 million uninsured residents, and that, according to the Department of Health and Human Services, health care expenditures will double by 2017, to $4.3 trillion. And even though the United States is the richest country in the world, the World Health Organization recently ranked it 37th in terms of health care quality and fairness.
Health care is a top-tier issue for our presidential candidates. The American electorate demands change in the health care system. This time, whoever takes the Oval Office must ensure that change comes about so that all Americans are provided adequate health care at affordable prices.
The first question to be answered is: Should all Americans be entitled to health care? It is a simple question but one that has produced considerable debate, because we as a nation have never considered health care to be a right. Should it be? If it should not become a fundamental right, should some Americans—such as children—have health insurance coverage guaranteed to them?
The permutations are many, but there is only one right and fair choice: All Americans, including those taking overt steps to become citizens, should be provided health care. This is necessary for many of the same reasons that led to Medicare's passage in 1965: The crisis is as widespread and pervasive today as it was in the years preceding Medicare's enactment, and some type of relief is warranted on a national level, but for all U.S. citizens—not just for seniors.
Who should pay for that care is an important issue, but the answer to this question should not be the engine that drives the car. Instead, we should declare that all Americans should have access to health care, and then figure out a way to achieve that goal.
The two major-party presidential candidates, Sen. John McCain (R-Ariz.) and Sen. Barack Obama (D-Ill.) have very different approaches to the problem. Sen. McCain declares himself to be a free-market guy, believing that governmental intervention proposed in Democratic plans would be shackled with “inefficiency, irrationality, and uncontrolled costs.” A fundamental principle of his plan is that no American should be required to buy health insurance.
As noted in the Fortune article, Sen. McCain says his plan would “tax employer-sponsored health insurance, and use the money to provide tax credits (up to $5,000) for individuals and families to shop for coverage on their own,” thereby “forcing insurance companies to compete head-to-head for customers” and ostensibly lowering prices. He has also proposed a creation of a Guaranteed Access Plan to help ill and high-risk patients—who otherwise would find coverage very expensive or impossible to buy—obtain “coverage of last resort.” He also would not require insurers to sell policies to those with preexisting medical conditions. His message makes for nice sound bites but the devil, as always, is in the details.
The underpinning of McCain's plan involves the elimination of the tax break that employees now receive when their employer provides their health insurance. The employee would have to pay tax on the cost of an employer-provided plan for that employee or his family. With the federal dollars saved by eliminating the tax break, McCain would provide a $2,500 federal tax rebate for individuals and $5,000 per family that could be used toward the purchase of private health care policies. Sen. McCain expects that this would result in many fewer people opting for employer-sponsored health benefits.
In addition, Sen. McCain would allow the individual to purchase the health plan that best fits his or her stage in life, allowing insurers to offer an array of plans, with various benefits, copays, and deductibles. As one writer has observed, however, the downside is that “he risks leaving the poor and sick behind” (although one McCain lieutenant says the tax credit would be increased for that patient population).
Sen. Obama describes his plan as providing affordable and portable health coverage for all and lowering costs by modernizing the health care system. Specifically, he would require that no American be turned away from any insurance plan because of an illness or a preexisting condition. Americans would receive benefits similar to those that Sen. Obama and other members of Congress receive through the Federal Employees Health Benefits Program. He also calls for a National Health Insurance Exchange to assist individuals who wish to purchase a private insurance plan.
Employers that do not offer or make a “meaningful” contribution to the cost of quality health coverage for their employees would be required to contribute a percentage of payroll toward the costs of a national plan, although some small employers would be exempt from that requirement. Parents would be required to provide coverage for their children.
For physicians, Obama's plan would strengthen comparative effectiveness research by establishing an independent institute to guide reviews and studies, giving physicians and patients up-to-date clinical information. Another part of his plan would strengthen antitrust laws to prevent insurers from overcharging physicians for their malpractice insurance and would work to improve systems that eliminate errors in patient care and safety. Again, nice bullet points, but crafting all his points into a workable solution for a majority of Congress will take some doing.
In our next column, we will look at what U.S. history and health plans in other countries can teach us about health reform.
With Sen. Edward M. Kennedy (D-Mass.), a staunch supporter of patient rights and health care, now battling brain cancer, the subject of health care in our nation becomes all the more poignant. In a two-part series, we will consider this important issue.
Our present health care system is broken, and we need an updated model. A March 17, 2008, Fortune magazine article reported that the United States now has 47 million uninsured residents, and that, according to the Department of Health and Human Services, health care expenditures will double by 2017, to $4.3 trillion. And even though the United States is the richest country in the world, the World Health Organization recently ranked it 37th in terms of health care quality and fairness.
Health care is a top-tier issue for our presidential candidates. The American electorate demands change in the health care system. This time, whoever takes the Oval Office must ensure that change comes about so that all Americans are provided adequate health care at affordable prices.
The first question to be answered is: Should all Americans be entitled to health care? It is a simple question but one that has produced considerable debate, because we as a nation have never considered health care to be a right. Should it be? If it should not become a fundamental right, should some Americans—such as children—have health insurance coverage guaranteed to them?
The permutations are many, but there is only one right and fair choice: All Americans, including those taking overt steps to become citizens, should be provided health care. This is necessary for many of the same reasons that led to Medicare's passage in 1965: The crisis is as widespread and pervasive today as it was in the years preceding Medicare's enactment, and some type of relief is warranted on a national level, but for all U.S. citizens—not just for seniors.
Who should pay for that care is an important issue, but the answer to this question should not be the engine that drives the car. Instead, we should declare that all Americans should have access to health care, and then figure out a way to achieve that goal.
The two major-party presidential candidates, Sen. John McCain (R-Ariz.) and Sen. Barack Obama (D-Ill.) have very different approaches to the problem. Sen. McCain declares himself to be a free-market guy, believing that governmental intervention proposed in Democratic plans would be shackled with “inefficiency, irrationality, and uncontrolled costs.” A fundamental principle of his plan is that no American should be required to buy health insurance.
As noted in the Fortune article, Sen. McCain says his plan would “tax employer-sponsored health insurance, and use the money to provide tax credits (up to $5,000) for individuals and families to shop for coverage on their own,” thereby “forcing insurance companies to compete head-to-head for customers” and ostensibly lowering prices. He has also proposed a creation of a Guaranteed Access Plan to help ill and high-risk patients—who otherwise would find coverage very expensive or impossible to buy—obtain “coverage of last resort.” He also would not require insurers to sell policies to those with preexisting medical conditions. His message makes for nice sound bites but the devil, as always, is in the details.
The underpinning of McCain's plan involves the elimination of the tax break that employees now receive when their employer provides their health insurance. The employee would have to pay tax on the cost of an employer-provided plan for that employee or his family. With the federal dollars saved by eliminating the tax break, McCain would provide a $2,500 federal tax rebate for individuals and $5,000 per family that could be used toward the purchase of private health care policies. Sen. McCain expects that this would result in many fewer people opting for employer-sponsored health benefits.
In addition, Sen. McCain would allow the individual to purchase the health plan that best fits his or her stage in life, allowing insurers to offer an array of plans, with various benefits, copays, and deductibles. As one writer has observed, however, the downside is that “he risks leaving the poor and sick behind” (although one McCain lieutenant says the tax credit would be increased for that patient population).
Sen. Obama describes his plan as providing affordable and portable health coverage for all and lowering costs by modernizing the health care system. Specifically, he would require that no American be turned away from any insurance plan because of an illness or a preexisting condition. Americans would receive benefits similar to those that Sen. Obama and other members of Congress receive through the Federal Employees Health Benefits Program. He also calls for a National Health Insurance Exchange to assist individuals who wish to purchase a private insurance plan.
Employers that do not offer or make a “meaningful” contribution to the cost of quality health coverage for their employees would be required to contribute a percentage of payroll toward the costs of a national plan, although some small employers would be exempt from that requirement. Parents would be required to provide coverage for their children.
For physicians, Obama's plan would strengthen comparative effectiveness research by establishing an independent institute to guide reviews and studies, giving physicians and patients up-to-date clinical information. Another part of his plan would strengthen antitrust laws to prevent insurers from overcharging physicians for their malpractice insurance and would work to improve systems that eliminate errors in patient care and safety. Again, nice bullet points, but crafting all his points into a workable solution for a majority of Congress will take some doing.
In our next column, we will look at what U.S. history and health plans in other countries can teach us about health reform.
With Sen. Edward M. Kennedy (D-Mass.), a staunch supporter of patient rights and health care, now battling brain cancer, the subject of health care in our nation becomes all the more poignant. In a two-part series, we will consider this important issue.
Our present health care system is broken, and we need an updated model. A March 17, 2008, Fortune magazine article reported that the United States now has 47 million uninsured residents, and that, according to the Department of Health and Human Services, health care expenditures will double by 2017, to $4.3 trillion. And even though the United States is the richest country in the world, the World Health Organization recently ranked it 37th in terms of health care quality and fairness.
Health care is a top-tier issue for our presidential candidates. The American electorate demands change in the health care system. This time, whoever takes the Oval Office must ensure that change comes about so that all Americans are provided adequate health care at affordable prices.
The first question to be answered is: Should all Americans be entitled to health care? It is a simple question but one that has produced considerable debate, because we as a nation have never considered health care to be a right. Should it be? If it should not become a fundamental right, should some Americans—such as children—have health insurance coverage guaranteed to them?
The permutations are many, but there is only one right and fair choice: All Americans, including those taking overt steps to become citizens, should be provided health care. This is necessary for many of the same reasons that led to Medicare's passage in 1965: The crisis is as widespread and pervasive today as it was in the years preceding Medicare's enactment, and some type of relief is warranted on a national level, but for all U.S. citizens—not just for seniors.
Who should pay for that care is an important issue, but the answer to this question should not be the engine that drives the car. Instead, we should declare that all Americans should have access to health care, and then figure out a way to achieve that goal.
The two major-party presidential candidates, Sen. John McCain (R-Ariz.) and Sen. Barack Obama (D-Ill.) have very different approaches to the problem. Sen. McCain declares himself to be a free-market guy, believing that governmental intervention proposed in Democratic plans would be shackled with “inefficiency, irrationality, and uncontrolled costs.” A fundamental principle of his plan is that no American should be required to buy health insurance.
As noted in the Fortune article, Sen. McCain says his plan would “tax employer-sponsored health insurance, and use the money to provide tax credits (up to $5,000) for individuals and families to shop for coverage on their own,” thereby “forcing insurance companies to compete head-to-head for customers” and ostensibly lowering prices. He has also proposed a creation of a Guaranteed Access Plan to help ill and high-risk patients—who otherwise would find coverage very expensive or impossible to buy—obtain “coverage of last resort.” He also would not require insurers to sell policies to those with preexisting medical conditions. His message makes for nice sound bites but the devil, as always, is in the details.
The underpinning of McCain's plan involves the elimination of the tax break that employees now receive when their employer provides their health insurance. The employee would have to pay tax on the cost of an employer-provided plan for that employee or his family. With the federal dollars saved by eliminating the tax break, McCain would provide a $2,500 federal tax rebate for individuals and $5,000 per family that could be used toward the purchase of private health care policies. Sen. McCain expects that this would result in many fewer people opting for employer-sponsored health benefits.
In addition, Sen. McCain would allow the individual to purchase the health plan that best fits his or her stage in life, allowing insurers to offer an array of plans, with various benefits, copays, and deductibles. As one writer has observed, however, the downside is that “he risks leaving the poor and sick behind” (although one McCain lieutenant says the tax credit would be increased for that patient population).
Sen. Obama describes his plan as providing affordable and portable health coverage for all and lowering costs by modernizing the health care system. Specifically, he would require that no American be turned away from any insurance plan because of an illness or a preexisting condition. Americans would receive benefits similar to those that Sen. Obama and other members of Congress receive through the Federal Employees Health Benefits Program. He also calls for a National Health Insurance Exchange to assist individuals who wish to purchase a private insurance plan.
Employers that do not offer or make a “meaningful” contribution to the cost of quality health coverage for their employees would be required to contribute a percentage of payroll toward the costs of a national plan, although some small employers would be exempt from that requirement. Parents would be required to provide coverage for their children.
For physicians, Obama's plan would strengthen comparative effectiveness research by establishing an independent institute to guide reviews and studies, giving physicians and patients up-to-date clinical information. Another part of his plan would strengthen antitrust laws to prevent insurers from overcharging physicians for their malpractice insurance and would work to improve systems that eliminate errors in patient care and safety. Again, nice bullet points, but crafting all his points into a workable solution for a majority of Congress will take some doing.
In our next column, we will look at what U.S. history and health plans in other countries can teach us about health reform.
Adverse Event Confidentiality
Imagine being a physician who has been involved in an adverse event—one that, through no real fault of your own, caused death or serious injury to a patient. Should your future patients have a right to know of your involvement?
Florida physicians are dealing with this issue in the wake of a recent decision by the Florida Supreme Court earlier this year, in Florida Hospital Waterman, Inc. etc., v. Teresa M. Buster, etc., et al. (No. SC06–912). In November 2004, Florida voters passed a constitutional amendment titled “Patients' Right to Know About Adverse Medical Incidents.” The amendment let patients obtain “any records made or received in the course of business by a health care facility or provider relating to any adverse medical incident”—as long as the identity of the patients involved in the incidents wasn't revealed, and other privacy restrictions were adhered to. This included incidents that had to be reported to a government agency, or those that were reported to health care facility review committees. The amendment was to become effective immediately.
About 6 months later, in June 2005, the Florida legislature tried to clarify the amendment legislatively, stating that existing restrictions on use of records in court cases stay in place and that “discovering such documents does not mean that any of them can be introduced into evidence in a lawsuit … and [they] may not be used for any purpose, including impeachment, in any civil or administrative action against a health care facility or health care provider.”
Because of the legislature's action, two lower courts in Florida were asked to decide whether the amendment passed by the voters applied retroactively to records that existed before the amendment was passed. One court held that the amendment was retroactive; the other did not. In a 4–3 decision (with a sharply worded dissent), the Florida Supreme Court found that the amendment was indeed retroactive. The court also found that several subsections of new law were in conflict with the amendment passed by the voters, and were thus unconstitutional.
The Florida high court noted that access to peer review information is not to be limited to only those who are themselves patients since that restriction is not contained within the amendment.
But more importantly, the court also said that because part of the new law allows current laws restricting access to adverse incidents to remain in place, the new law is in conflict with the amendment passed by the voters and therefore “cannot stand.”
The dissenting justices argued that the amendment should not be applied retroactively. They noted that hospitals are required to perform peer review as part of medical quality assurance, and that the hospitals should be able to keep peer review records from being used in legal cases. Now that the majority has found the amendment to be retroactive, the dissenters pointed out, that allows for the discovery of records previously kept confidential, a consequence that is “legally unsupportable” and “fundamentally unfair.”
The Florida Supreme Court goofed. In its fervor to address the issue of retroactivity, it created more of a problem than it should have. The majority eviscerates what has become the linchpin for a health care facility's ability to ensure quality of care: its peer review function.
For example, let's take a situation in which a hospital's peer review committee obtains documents relating to an adverse medical incident. From those documents, the peer review committee makes a decision about the care rendered by a particular doctor.
Before the Florida Hospital Waterman case came down, there was an expectation that documents considered by a peer review committee would be privileged from discovery and not admissible in a legal proceeding. With Florida Hospital Waterman, no longer would such documents be cloaked with the protections against discovery provided in Florida. This would be inconsistent with protections against discovery provided in most—if not all—states having peer review statutes.
And, again, according to Florida Hospital Waterman, the right to see such evidence can pertain to documents that existed as of the date the Florida voters passed the constitutional amendment. How far back can the documents go? The court never says.
Another problem is that, for example, an accrediting organization such as the Joint Commission—which credentials a considerable portion of our nation's hospitals and other health care facilities—may find some difficulty with the Florida Hospital Waterman's majority's decision. One area the Joint Commission looks at in its accreditation process are “sentinel events”—those involving deaths or serious injuries. What if a sentinel event is intertwined with an adverse medical incident? All such information would be usable in legal cases under Florida Hospital Waterman, which may make hospital administrators uncomfortable if the commission asks them to produce sentinel event information during an accreditation or reaccreditation process.
Then there is the privacy issue. If privacy laws such as the Health Insurance Portability and Accountability Act (HIPAA) are to be respected, what good is producing an adverse medical incident report that is required by HIPAA but not including identifying information about the patient? HIPAA would thus destroy much of the good intended by the amendment passed by the voters. Moreover, since the amendment doesn't specify exactly who is entitled to such records, then anyone can request such information, regardless of applicable state or federal privacy laws.
Last, but certainly not least, are evidence laws relating to adverse medical incident records. The Florida high court blundered when it stated that a restriction on admitting such records in court cannot stand. Surely the decision on whether the constitutional amendment was retroactive was never intended to circumvent Florida's laws regulating the admissibility of evidence. Yet this is a conundrum that the court majority has now created.
The law is never precise, and many times its development can raise more issues than it solves. That is what has happened here. What the Florida Supreme Court has done needs fixing—by the court somehow amending its decision, or by the Florida legislature harmonizing state law with the constitutional amendment passed by Florida's voters, or by having Florida voters amend the state constitution in some fashion. Only then can physicians in Florida and elsewhere be assured that the confidential work of peer review committees and accreditation organizations will remain confidential.
Imagine being a physician who has been involved in an adverse event—one that, through no real fault of your own, caused death or serious injury to a patient. Should your future patients have a right to know of your involvement?
Florida physicians are dealing with this issue in the wake of a recent decision by the Florida Supreme Court earlier this year, in Florida Hospital Waterman, Inc. etc., v. Teresa M. Buster, etc., et al. (No. SC06–912). In November 2004, Florida voters passed a constitutional amendment titled “Patients' Right to Know About Adverse Medical Incidents.” The amendment let patients obtain “any records made or received in the course of business by a health care facility or provider relating to any adverse medical incident”—as long as the identity of the patients involved in the incidents wasn't revealed, and other privacy restrictions were adhered to. This included incidents that had to be reported to a government agency, or those that were reported to health care facility review committees. The amendment was to become effective immediately.
About 6 months later, in June 2005, the Florida legislature tried to clarify the amendment legislatively, stating that existing restrictions on use of records in court cases stay in place and that “discovering such documents does not mean that any of them can be introduced into evidence in a lawsuit … and [they] may not be used for any purpose, including impeachment, in any civil or administrative action against a health care facility or health care provider.”
Because of the legislature's action, two lower courts in Florida were asked to decide whether the amendment passed by the voters applied retroactively to records that existed before the amendment was passed. One court held that the amendment was retroactive; the other did not. In a 4–3 decision (with a sharply worded dissent), the Florida Supreme Court found that the amendment was indeed retroactive. The court also found that several subsections of new law were in conflict with the amendment passed by the voters, and were thus unconstitutional.
The Florida high court noted that access to peer review information is not to be limited to only those who are themselves patients since that restriction is not contained within the amendment.
But more importantly, the court also said that because part of the new law allows current laws restricting access to adverse incidents to remain in place, the new law is in conflict with the amendment passed by the voters and therefore “cannot stand.”
The dissenting justices argued that the amendment should not be applied retroactively. They noted that hospitals are required to perform peer review as part of medical quality assurance, and that the hospitals should be able to keep peer review records from being used in legal cases. Now that the majority has found the amendment to be retroactive, the dissenters pointed out, that allows for the discovery of records previously kept confidential, a consequence that is “legally unsupportable” and “fundamentally unfair.”
The Florida Supreme Court goofed. In its fervor to address the issue of retroactivity, it created more of a problem than it should have. The majority eviscerates what has become the linchpin for a health care facility's ability to ensure quality of care: its peer review function.
For example, let's take a situation in which a hospital's peer review committee obtains documents relating to an adverse medical incident. From those documents, the peer review committee makes a decision about the care rendered by a particular doctor.
Before the Florida Hospital Waterman case came down, there was an expectation that documents considered by a peer review committee would be privileged from discovery and not admissible in a legal proceeding. With Florida Hospital Waterman, no longer would such documents be cloaked with the protections against discovery provided in Florida. This would be inconsistent with protections against discovery provided in most—if not all—states having peer review statutes.
And, again, according to Florida Hospital Waterman, the right to see such evidence can pertain to documents that existed as of the date the Florida voters passed the constitutional amendment. How far back can the documents go? The court never says.
Another problem is that, for example, an accrediting organization such as the Joint Commission—which credentials a considerable portion of our nation's hospitals and other health care facilities—may find some difficulty with the Florida Hospital Waterman's majority's decision. One area the Joint Commission looks at in its accreditation process are “sentinel events”—those involving deaths or serious injuries. What if a sentinel event is intertwined with an adverse medical incident? All such information would be usable in legal cases under Florida Hospital Waterman, which may make hospital administrators uncomfortable if the commission asks them to produce sentinel event information during an accreditation or reaccreditation process.
Then there is the privacy issue. If privacy laws such as the Health Insurance Portability and Accountability Act (HIPAA) are to be respected, what good is producing an adverse medical incident report that is required by HIPAA but not including identifying information about the patient? HIPAA would thus destroy much of the good intended by the amendment passed by the voters. Moreover, since the amendment doesn't specify exactly who is entitled to such records, then anyone can request such information, regardless of applicable state or federal privacy laws.
Last, but certainly not least, are evidence laws relating to adverse medical incident records. The Florida high court blundered when it stated that a restriction on admitting such records in court cannot stand. Surely the decision on whether the constitutional amendment was retroactive was never intended to circumvent Florida's laws regulating the admissibility of evidence. Yet this is a conundrum that the court majority has now created.
The law is never precise, and many times its development can raise more issues than it solves. That is what has happened here. What the Florida Supreme Court has done needs fixing—by the court somehow amending its decision, or by the Florida legislature harmonizing state law with the constitutional amendment passed by Florida's voters, or by having Florida voters amend the state constitution in some fashion. Only then can physicians in Florida and elsewhere be assured that the confidential work of peer review committees and accreditation organizations will remain confidential.
Imagine being a physician who has been involved in an adverse event—one that, through no real fault of your own, caused death or serious injury to a patient. Should your future patients have a right to know of your involvement?
Florida physicians are dealing with this issue in the wake of a recent decision by the Florida Supreme Court earlier this year, in Florida Hospital Waterman, Inc. etc., v. Teresa M. Buster, etc., et al. (No. SC06–912). In November 2004, Florida voters passed a constitutional amendment titled “Patients' Right to Know About Adverse Medical Incidents.” The amendment let patients obtain “any records made or received in the course of business by a health care facility or provider relating to any adverse medical incident”—as long as the identity of the patients involved in the incidents wasn't revealed, and other privacy restrictions were adhered to. This included incidents that had to be reported to a government agency, or those that were reported to health care facility review committees. The amendment was to become effective immediately.
About 6 months later, in June 2005, the Florida legislature tried to clarify the amendment legislatively, stating that existing restrictions on use of records in court cases stay in place and that “discovering such documents does not mean that any of them can be introduced into evidence in a lawsuit … and [they] may not be used for any purpose, including impeachment, in any civil or administrative action against a health care facility or health care provider.”
Because of the legislature's action, two lower courts in Florida were asked to decide whether the amendment passed by the voters applied retroactively to records that existed before the amendment was passed. One court held that the amendment was retroactive; the other did not. In a 4–3 decision (with a sharply worded dissent), the Florida Supreme Court found that the amendment was indeed retroactive. The court also found that several subsections of new law were in conflict with the amendment passed by the voters, and were thus unconstitutional.
The Florida high court noted that access to peer review information is not to be limited to only those who are themselves patients since that restriction is not contained within the amendment.
But more importantly, the court also said that because part of the new law allows current laws restricting access to adverse incidents to remain in place, the new law is in conflict with the amendment passed by the voters and therefore “cannot stand.”
The dissenting justices argued that the amendment should not be applied retroactively. They noted that hospitals are required to perform peer review as part of medical quality assurance, and that the hospitals should be able to keep peer review records from being used in legal cases. Now that the majority has found the amendment to be retroactive, the dissenters pointed out, that allows for the discovery of records previously kept confidential, a consequence that is “legally unsupportable” and “fundamentally unfair.”
The Florida Supreme Court goofed. In its fervor to address the issue of retroactivity, it created more of a problem than it should have. The majority eviscerates what has become the linchpin for a health care facility's ability to ensure quality of care: its peer review function.
For example, let's take a situation in which a hospital's peer review committee obtains documents relating to an adverse medical incident. From those documents, the peer review committee makes a decision about the care rendered by a particular doctor.
Before the Florida Hospital Waterman case came down, there was an expectation that documents considered by a peer review committee would be privileged from discovery and not admissible in a legal proceeding. With Florida Hospital Waterman, no longer would such documents be cloaked with the protections against discovery provided in Florida. This would be inconsistent with protections against discovery provided in most—if not all—states having peer review statutes.
And, again, according to Florida Hospital Waterman, the right to see such evidence can pertain to documents that existed as of the date the Florida voters passed the constitutional amendment. How far back can the documents go? The court never says.
Another problem is that, for example, an accrediting organization such as the Joint Commission—which credentials a considerable portion of our nation's hospitals and other health care facilities—may find some difficulty with the Florida Hospital Waterman's majority's decision. One area the Joint Commission looks at in its accreditation process are “sentinel events”—those involving deaths or serious injuries. What if a sentinel event is intertwined with an adverse medical incident? All such information would be usable in legal cases under Florida Hospital Waterman, which may make hospital administrators uncomfortable if the commission asks them to produce sentinel event information during an accreditation or reaccreditation process.
Then there is the privacy issue. If privacy laws such as the Health Insurance Portability and Accountability Act (HIPAA) are to be respected, what good is producing an adverse medical incident report that is required by HIPAA but not including identifying information about the patient? HIPAA would thus destroy much of the good intended by the amendment passed by the voters. Moreover, since the amendment doesn't specify exactly who is entitled to such records, then anyone can request such information, regardless of applicable state or federal privacy laws.
Last, but certainly not least, are evidence laws relating to adverse medical incident records. The Florida high court blundered when it stated that a restriction on admitting such records in court cannot stand. Surely the decision on whether the constitutional amendment was retroactive was never intended to circumvent Florida's laws regulating the admissibility of evidence. Yet this is a conundrum that the court majority has now created.
The law is never precise, and many times its development can raise more issues than it solves. That is what has happened here. What the Florida Supreme Court has done needs fixing—by the court somehow amending its decision, or by the Florida legislature harmonizing state law with the constitutional amendment passed by Florida's voters, or by having Florida voters amend the state constitution in some fashion. Only then can physicians in Florida and elsewhere be assured that the confidential work of peer review committees and accreditation organizations will remain confidential.
Rescinding Health Insurance
When he was asked about corporate America during one of his speeches on the presidential campaign trail, former Democratic candidate John Edwards noted, “They don't give the layperson anything; it has to be taken from them.” How true this admonition and observation is when it comes to the plight of health plan members whose health insurance coverage is rescinded just when medical bills come due. The “poster child” for this problem seems to be Health Net Inc. of Woodland Hills, Calif.—for good reason.
On Feb. 21, 2008, California resident Patsy Bates was awarded $9 million in an arbitration proceeding involving Health Net. Ms. Bates had a health insurance policy from another company, but was convinced by an insurance agent to try Health Net. She applied for the new policy in July 2003, and Health Net approved her new policy effective Aug. 1. In September of that year, she was diagnosed with breast cancer. Three months later, Health Net asked that she elaborate on certain answers she gave on her enrollment application. In January 2004, Health Net sent Ms. Bates a letter telling her it was rescinding her health insurance policy. This left her, at the time of the arbitration, with unpaid medical bills totaling nearly $130,000.
Bates sued Health Net for breach of contract, and breach of the duty of good faith and fair dealing. She also claimed that by rescinding her policy, Health Net was guilty of oppression, fraud, or malice.
Evidence presented during the arbitration indicated that after Ms. Bates filled out and signed her application, her agent changed what she gave as her weight; however, he did not tell Ms. Bates about the change, nor did he have her approve the change in writing, as required by law.
One of the standards Health Net used for reviewing applications pertained to weight, that is, if an applicant over age 50 weighed more than 198 pounds, the application could be declined, or “rated a “+50.” Although Ms. Bates' actual weight was not mentioned in the arbitration record, it appears the agent changed the weight listed on the application from another amount to 185. Ms. Bates' application was initially approved without further investigation or follow-up.
Ms. Bates was a victim of one of the frequent “rescission investigations” performed by Health Net employees. Information omitted from an application, even by mistake, could be grounds for rescission, and employee bonuses were tied to the rescission investigations. “It's difficult to imagine a policy more reprehensible than tying bonuses to encourage the rescission of health insurance that helps keep the public well and alive,” wrote the arbitrator in the case.
Ms. Bates claimed that the rescission of her policy was in bad faith because it was based upon the information supplied in the initially approved application. If there was a problem, it should have been investigated before the policy was issued so that if it was declined, she could still keep her previous coverage.
The arbitrator concluded that Health Net was more concerned with its own financial interests than concerns for the interests of Ms. Bates. The award covered Ms. Bates' medical expenses, emotional distress, and nearly $8.5 million in punitive damages. According to one newspaper article, this ruling was the first of its kind, and the most powerful rebuke to California's major insurers concerning the practice of rescinding health insurance policies.
A day before the Bates decision came out, the Los Angeles City Attorney filed a 47-page lawsuit against Health Net and its various entities for claims based on unfair competition and false advertising (Dkt. No. BC385816, Sup. Ct., Cty. of Los Angeles). The thrust of this lawsuit is that coverage provided by Health Net and its member companies is largely illusory because they rescind coverage upon submission of a substantial claim for benefits, as was the case with Ms. Bates. That suit is ongoing.
For its part, Health Net reported that it paid out claims in excess of $200 million in 2006 and that its program of tying bonuses to number of rescinded health insurance contracts has been dropped. The company also said that it has halted cancellations and that it would be changing its coverage applications and retraining its sales force.
Health Net is not the only California insurer in the crosshairs of legal scrutiny. Los Angeles City Attorney Rocky Delgadillo announced in April that he is suing Anthem Blue Cross for illegally canceling the policies of more than 6,000 California residents. There is also the year-old class-action suit against Anthem for canceling policies, and a case joined in last year by the largest organizations representing California doctors and hospitals, accusing the state's largest health plan of illegally and routinely refusing to pay millions of dollars for medical care provided to enrollees whose policies were later canceled.
Then, of course, there was the much-publicized decision earlier this year when Cigna HealthCare denied a liver transplant for a 17-year-old girl in California. The insurer then changed its mind, but it was too late—the girl died a few hours after the reversal was announced. Another insurer decided that after years of paying for nursing care for a badly disabled boy, the boy no longer needed it, even though he suffered from severe brain damage and was unable to walk, sit up, speak, or eat by mouth.
California's Department of Managed Health Care is trying to help people get their policies back. In mid-April, the department announced that it was ordering immediate reinstatement of policies for 26 consumers whose policies the department found were wrongfully rescinded. The department is also ordering a re-review of all other rescissions over the past 4 years as part of its ongoing investigation into the rescission practices of five of the largest health plans that offer individual coverage to state residents.
From all these examples, one could assert that there is a problem in California with insurers' wanting to get out of insurance contracts once an illness or treatment has occurred. But is it an epidemic, or is this problem of rescission limited to California? Evidence has not suggested the problem is “systemic” nationwide, but where there is smoke, there surely is fire. One thing is certain: Insurers seem to be playing the “blame game”—blaming consumers for not filling out applications for coverage properly when these companies have failed to properly investigate the contents of those applications. Ain't that the American way now—place blame on others for your own failings?
Equally noteworthy is that when insurers rescind health coverage due to their own shortcomings, they can still retain premiums paid by patients or employers, deny payments to doctors and health care facilities for care rendered—and perhaps then make their profit margins even heftier. Moreover, buying insurance to protect against a loss or risk is the expectation of only those who buy the insurance—and also, perhaps, the physicians who treat patients because they have certain insurance coverage; they are expecting to be paid by that insurer. Another perspective exists, however: to see how inventive an entity protecting against that risk can be to deny or limit the coverage purchased, and to find ways to preclude the doctors who treat those patients from getting paid.
In the end, maybe the Latin, caveat emptor, might be worth thinking about. However, it should never come to this, since the insurance laws of any state in which an insurer wishes to write health policies should be inclusive of a provision or two barring cancellations or rescissions of policies based on innocent or negligently made mistakes done by the insured or anyone acting on behalf of the insured in filling out an application for insurance.
Regardless of what remedies are put in place, a perception also certainly exists that rescission of health care coverage only adds to the woes of the health care crisis now engulfing our economy and nation today. But what is important for the reader to know is that maybe health insurers do not insure medical disease or injury, but instead ensure that they will avoid risks themselves once a patient makes a claim.
When he was asked about corporate America during one of his speeches on the presidential campaign trail, former Democratic candidate John Edwards noted, “They don't give the layperson anything; it has to be taken from them.” How true this admonition and observation is when it comes to the plight of health plan members whose health insurance coverage is rescinded just when medical bills come due. The “poster child” for this problem seems to be Health Net Inc. of Woodland Hills, Calif.—for good reason.
On Feb. 21, 2008, California resident Patsy Bates was awarded $9 million in an arbitration proceeding involving Health Net. Ms. Bates had a health insurance policy from another company, but was convinced by an insurance agent to try Health Net. She applied for the new policy in July 2003, and Health Net approved her new policy effective Aug. 1. In September of that year, she was diagnosed with breast cancer. Three months later, Health Net asked that she elaborate on certain answers she gave on her enrollment application. In January 2004, Health Net sent Ms. Bates a letter telling her it was rescinding her health insurance policy. This left her, at the time of the arbitration, with unpaid medical bills totaling nearly $130,000.
Bates sued Health Net for breach of contract, and breach of the duty of good faith and fair dealing. She also claimed that by rescinding her policy, Health Net was guilty of oppression, fraud, or malice.
Evidence presented during the arbitration indicated that after Ms. Bates filled out and signed her application, her agent changed what she gave as her weight; however, he did not tell Ms. Bates about the change, nor did he have her approve the change in writing, as required by law.
One of the standards Health Net used for reviewing applications pertained to weight, that is, if an applicant over age 50 weighed more than 198 pounds, the application could be declined, or “rated a “+50.” Although Ms. Bates' actual weight was not mentioned in the arbitration record, it appears the agent changed the weight listed on the application from another amount to 185. Ms. Bates' application was initially approved without further investigation or follow-up.
Ms. Bates was a victim of one of the frequent “rescission investigations” performed by Health Net employees. Information omitted from an application, even by mistake, could be grounds for rescission, and employee bonuses were tied to the rescission investigations. “It's difficult to imagine a policy more reprehensible than tying bonuses to encourage the rescission of health insurance that helps keep the public well and alive,” wrote the arbitrator in the case.
Ms. Bates claimed that the rescission of her policy was in bad faith because it was based upon the information supplied in the initially approved application. If there was a problem, it should have been investigated before the policy was issued so that if it was declined, she could still keep her previous coverage.
The arbitrator concluded that Health Net was more concerned with its own financial interests than concerns for the interests of Ms. Bates. The award covered Ms. Bates' medical expenses, emotional distress, and nearly $8.5 million in punitive damages. According to one newspaper article, this ruling was the first of its kind, and the most powerful rebuke to California's major insurers concerning the practice of rescinding health insurance policies.
A day before the Bates decision came out, the Los Angeles City Attorney filed a 47-page lawsuit against Health Net and its various entities for claims based on unfair competition and false advertising (Dkt. No. BC385816, Sup. Ct., Cty. of Los Angeles). The thrust of this lawsuit is that coverage provided by Health Net and its member companies is largely illusory because they rescind coverage upon submission of a substantial claim for benefits, as was the case with Ms. Bates. That suit is ongoing.
For its part, Health Net reported that it paid out claims in excess of $200 million in 2006 and that its program of tying bonuses to number of rescinded health insurance contracts has been dropped. The company also said that it has halted cancellations and that it would be changing its coverage applications and retraining its sales force.
Health Net is not the only California insurer in the crosshairs of legal scrutiny. Los Angeles City Attorney Rocky Delgadillo announced in April that he is suing Anthem Blue Cross for illegally canceling the policies of more than 6,000 California residents. There is also the year-old class-action suit against Anthem for canceling policies, and a case joined in last year by the largest organizations representing California doctors and hospitals, accusing the state's largest health plan of illegally and routinely refusing to pay millions of dollars for medical care provided to enrollees whose policies were later canceled.
Then, of course, there was the much-publicized decision earlier this year when Cigna HealthCare denied a liver transplant for a 17-year-old girl in California. The insurer then changed its mind, but it was too late—the girl died a few hours after the reversal was announced. Another insurer decided that after years of paying for nursing care for a badly disabled boy, the boy no longer needed it, even though he suffered from severe brain damage and was unable to walk, sit up, speak, or eat by mouth.
California's Department of Managed Health Care is trying to help people get their policies back. In mid-April, the department announced that it was ordering immediate reinstatement of policies for 26 consumers whose policies the department found were wrongfully rescinded. The department is also ordering a re-review of all other rescissions over the past 4 years as part of its ongoing investigation into the rescission practices of five of the largest health plans that offer individual coverage to state residents.
From all these examples, one could assert that there is a problem in California with insurers' wanting to get out of insurance contracts once an illness or treatment has occurred. But is it an epidemic, or is this problem of rescission limited to California? Evidence has not suggested the problem is “systemic” nationwide, but where there is smoke, there surely is fire. One thing is certain: Insurers seem to be playing the “blame game”—blaming consumers for not filling out applications for coverage properly when these companies have failed to properly investigate the contents of those applications. Ain't that the American way now—place blame on others for your own failings?
Equally noteworthy is that when insurers rescind health coverage due to their own shortcomings, they can still retain premiums paid by patients or employers, deny payments to doctors and health care facilities for care rendered—and perhaps then make their profit margins even heftier. Moreover, buying insurance to protect against a loss or risk is the expectation of only those who buy the insurance—and also, perhaps, the physicians who treat patients because they have certain insurance coverage; they are expecting to be paid by that insurer. Another perspective exists, however: to see how inventive an entity protecting against that risk can be to deny or limit the coverage purchased, and to find ways to preclude the doctors who treat those patients from getting paid.
In the end, maybe the Latin, caveat emptor, might be worth thinking about. However, it should never come to this, since the insurance laws of any state in which an insurer wishes to write health policies should be inclusive of a provision or two barring cancellations or rescissions of policies based on innocent or negligently made mistakes done by the insured or anyone acting on behalf of the insured in filling out an application for insurance.
Regardless of what remedies are put in place, a perception also certainly exists that rescission of health care coverage only adds to the woes of the health care crisis now engulfing our economy and nation today. But what is important for the reader to know is that maybe health insurers do not insure medical disease or injury, but instead ensure that they will avoid risks themselves once a patient makes a claim.
When he was asked about corporate America during one of his speeches on the presidential campaign trail, former Democratic candidate John Edwards noted, “They don't give the layperson anything; it has to be taken from them.” How true this admonition and observation is when it comes to the plight of health plan members whose health insurance coverage is rescinded just when medical bills come due. The “poster child” for this problem seems to be Health Net Inc. of Woodland Hills, Calif.—for good reason.
On Feb. 21, 2008, California resident Patsy Bates was awarded $9 million in an arbitration proceeding involving Health Net. Ms. Bates had a health insurance policy from another company, but was convinced by an insurance agent to try Health Net. She applied for the new policy in July 2003, and Health Net approved her new policy effective Aug. 1. In September of that year, she was diagnosed with breast cancer. Three months later, Health Net asked that she elaborate on certain answers she gave on her enrollment application. In January 2004, Health Net sent Ms. Bates a letter telling her it was rescinding her health insurance policy. This left her, at the time of the arbitration, with unpaid medical bills totaling nearly $130,000.
Bates sued Health Net for breach of contract, and breach of the duty of good faith and fair dealing. She also claimed that by rescinding her policy, Health Net was guilty of oppression, fraud, or malice.
Evidence presented during the arbitration indicated that after Ms. Bates filled out and signed her application, her agent changed what she gave as her weight; however, he did not tell Ms. Bates about the change, nor did he have her approve the change in writing, as required by law.
One of the standards Health Net used for reviewing applications pertained to weight, that is, if an applicant over age 50 weighed more than 198 pounds, the application could be declined, or “rated a “+50.” Although Ms. Bates' actual weight was not mentioned in the arbitration record, it appears the agent changed the weight listed on the application from another amount to 185. Ms. Bates' application was initially approved without further investigation or follow-up.
Ms. Bates was a victim of one of the frequent “rescission investigations” performed by Health Net employees. Information omitted from an application, even by mistake, could be grounds for rescission, and employee bonuses were tied to the rescission investigations. “It's difficult to imagine a policy more reprehensible than tying bonuses to encourage the rescission of health insurance that helps keep the public well and alive,” wrote the arbitrator in the case.
Ms. Bates claimed that the rescission of her policy was in bad faith because it was based upon the information supplied in the initially approved application. If there was a problem, it should have been investigated before the policy was issued so that if it was declined, she could still keep her previous coverage.
The arbitrator concluded that Health Net was more concerned with its own financial interests than concerns for the interests of Ms. Bates. The award covered Ms. Bates' medical expenses, emotional distress, and nearly $8.5 million in punitive damages. According to one newspaper article, this ruling was the first of its kind, and the most powerful rebuke to California's major insurers concerning the practice of rescinding health insurance policies.
A day before the Bates decision came out, the Los Angeles City Attorney filed a 47-page lawsuit against Health Net and its various entities for claims based on unfair competition and false advertising (Dkt. No. BC385816, Sup. Ct., Cty. of Los Angeles). The thrust of this lawsuit is that coverage provided by Health Net and its member companies is largely illusory because they rescind coverage upon submission of a substantial claim for benefits, as was the case with Ms. Bates. That suit is ongoing.
For its part, Health Net reported that it paid out claims in excess of $200 million in 2006 and that its program of tying bonuses to number of rescinded health insurance contracts has been dropped. The company also said that it has halted cancellations and that it would be changing its coverage applications and retraining its sales force.
Health Net is not the only California insurer in the crosshairs of legal scrutiny. Los Angeles City Attorney Rocky Delgadillo announced in April that he is suing Anthem Blue Cross for illegally canceling the policies of more than 6,000 California residents. There is also the year-old class-action suit against Anthem for canceling policies, and a case joined in last year by the largest organizations representing California doctors and hospitals, accusing the state's largest health plan of illegally and routinely refusing to pay millions of dollars for medical care provided to enrollees whose policies were later canceled.
Then, of course, there was the much-publicized decision earlier this year when Cigna HealthCare denied a liver transplant for a 17-year-old girl in California. The insurer then changed its mind, but it was too late—the girl died a few hours after the reversal was announced. Another insurer decided that after years of paying for nursing care for a badly disabled boy, the boy no longer needed it, even though he suffered from severe brain damage and was unable to walk, sit up, speak, or eat by mouth.
California's Department of Managed Health Care is trying to help people get their policies back. In mid-April, the department announced that it was ordering immediate reinstatement of policies for 26 consumers whose policies the department found were wrongfully rescinded. The department is also ordering a re-review of all other rescissions over the past 4 years as part of its ongoing investigation into the rescission practices of five of the largest health plans that offer individual coverage to state residents.
From all these examples, one could assert that there is a problem in California with insurers' wanting to get out of insurance contracts once an illness or treatment has occurred. But is it an epidemic, or is this problem of rescission limited to California? Evidence has not suggested the problem is “systemic” nationwide, but where there is smoke, there surely is fire. One thing is certain: Insurers seem to be playing the “blame game”—blaming consumers for not filling out applications for coverage properly when these companies have failed to properly investigate the contents of those applications. Ain't that the American way now—place blame on others for your own failings?
Equally noteworthy is that when insurers rescind health coverage due to their own shortcomings, they can still retain premiums paid by patients or employers, deny payments to doctors and health care facilities for care rendered—and perhaps then make their profit margins even heftier. Moreover, buying insurance to protect against a loss or risk is the expectation of only those who buy the insurance—and also, perhaps, the physicians who treat patients because they have certain insurance coverage; they are expecting to be paid by that insurer. Another perspective exists, however: to see how inventive an entity protecting against that risk can be to deny or limit the coverage purchased, and to find ways to preclude the doctors who treat those patients from getting paid.
In the end, maybe the Latin, caveat emptor, might be worth thinking about. However, it should never come to this, since the insurance laws of any state in which an insurer wishes to write health policies should be inclusive of a provision or two barring cancellations or rescissions of policies based on innocent or negligently made mistakes done by the insured or anyone acting on behalf of the insured in filling out an application for insurance.
Regardless of what remedies are put in place, a perception also certainly exists that rescission of health care coverage only adds to the woes of the health care crisis now engulfing our economy and nation today. But what is important for the reader to know is that maybe health insurers do not insure medical disease or injury, but instead ensure that they will avoid risks themselves once a patient makes a claim.
Expert Witnesses Under Fire
Peer review, which plays an important role in reviewing medical care in hospital settings, sometimes is abused and warped to a degree never envisioned by legislators.
Two examples now moving through state legal systems warrant attention. They are Joseph Kamelgard, M.D. v. the American College of Surgeons (Circuit Court of Cook County, Ill.), and Charles Yancey, M.D. v. American Academy of Ophthalmology, et al. (4th Judicial District, Hennepin County, Minn.).
In the Kamelgard case, Dr. Kamelgard, a well-regarded bariatric surgeon from New Jersey, testified for the first time as a medical expert in a malpractice lawsuit in federal court in Brooklyn, N.Y. The plaintiff, a New York resident, was cared for at a Staten Island hospital. The defendant was a physician who, according to court records, had been named previously in professional liability cases. The jury decided in favor of the defendant physician.
The defendant physician never challenged Dr. Kamelgard's testimony. But the defendant later filed a complaint with the American College of Surgeons (ACS), accusing Dr. Kamelgard of allegedly testifying falsely regarding relevant standards of care. The ACS decided to charge Dr. Kamelgard with violating its rules, but shortly before a scheduled hearing, lawyers intervened on Dr. Kamelgard's behalf. The ACS later dropped the case; no explanation was ever given.
Despite Dr. Kamelgard's requests, the ACS refused to provide him with a copy of the complaint against him, the identity of his accuser, or even the names of the three members of the ACS deemed qualified as bariatric surgeons to review the complaint for the college.
Dr. Kamelgard filed a petition seeking the identities of these three members. The ACS asserted that what was being sought was protected by the state's Medical Studies Act (MSA), its peer review statute.
According to court filings, the ACS admitted that no practice of medicine occurred in Illinois, that testifying equates to the practice of medicine, and that by testifying there Dr. Kamelgard practiced medicine in New York (though New York's statute defining medical practice does not include testifying). But even though he was not licensed in Illinois and had no connection to the state except belonging to the ACS headquartered there, the ACS wrote that any physician who becomes a member agrees to be bound by Illinois law. The ACS, which has over 74,000 members worldwide, suggests by this case that Illinois law governs its conduct.
In the Minnesota case, Dr. Yancey sued a Dr. Weis, and his expert, a Dr. Hardten, for defamation as a result of their filing an ethics complaint against him with the American Academy of Ophthalmology (AAO). At the time the ethics charge was filed, Dr. Yancey was the expert medical witness for the plaintiff in a malpractice case in which Dr. Weis was a defendant. (As with Dr. Kamelgard, this was the first time that Dr. Yancey had ever testified as a medical expert.) Dr. Yancey also asserted that the AAO violated its own rules when it handled the complaint against him, including not keeping the matter confidential.
After a jury returned a verdict for $3 million in favor of the plaintiff, the case was going to be retried on damages with Dr. Yancey again offering testimony. But a day before this was to occur, the AAO served on him the ethics charge Dr. Weis and Dr. Hardten had filed.
According to his lawyer, Dr. Yancey claimed the ethics charge was an attempt to force him to alter his testimony, and to chill his ability to testify in other, subsequent cases that may have come his way. The defendants moved to dismiss Dr. Yancey's complaint and, in the alternative, for the summary judgment.
In the Kamelgard case, which is pending in Illinois but now on appeal, it remains to be seen whether an Illinois court will opine on how the ACS believes the Illinois statute should be used. The Yancey case is also still pending.
State peer review statutes were enacted to maintain and improve health care by keeping the products of a peer review committee privileged from discovery. (The exception to this is when certain cases are litigated in federal court—see my column “A Matter of Privilege,” Jan. 15, 2008, p. 34.)
The Yancey and Kamelgard cases highlight attempts to redefine peer review statutes to include judging expert testimony within the practice of medicine. Such statutes were also not intended to apply solely because an organization is headquartered in a particular state without any health care rendered there, or to chill an expert from further testifying during the course of a legal proceeding.
These cases also show that professional medical organizations sometimes seek to muzzle health care providers when their testimony is inappropriate in the eyes of such organizations. This trend may be influenced in part by a resolution adopted years ago by the American Medical Association declaring that testifying is considered the practice of medicine.
Granted, some physicians don't belong in a courtroom offering expert testimony. However, the Kamelgard and Yancey cases illustrate the Damoclean swords that professional societies may think they can wield in order to prevent physicians from offering legitimate expert medical testimony. After all, giving expert opinion is not rendering patient care, and thus is not generally considered the practice of medicine under state law.
If you are a physician wishing to consult or testify, don't be dissuaded from doing so—provided that you review all medical records properly and thoroughly, you are well credentialed, and you are familiar with all applicable medical standards by way of background, experience, and training. In addition, consult not only with your own organizations as to their standards and policies on testifying, but also ask the lawyer who retains you what your state law requires of experts who testify in legal cases.
Peer review, which plays an important role in reviewing medical care in hospital settings, sometimes is abused and warped to a degree never envisioned by legislators.
Two examples now moving through state legal systems warrant attention. They are Joseph Kamelgard, M.D. v. the American College of Surgeons (Circuit Court of Cook County, Ill.), and Charles Yancey, M.D. v. American Academy of Ophthalmology, et al. (4th Judicial District, Hennepin County, Minn.).
In the Kamelgard case, Dr. Kamelgard, a well-regarded bariatric surgeon from New Jersey, testified for the first time as a medical expert in a malpractice lawsuit in federal court in Brooklyn, N.Y. The plaintiff, a New York resident, was cared for at a Staten Island hospital. The defendant was a physician who, according to court records, had been named previously in professional liability cases. The jury decided in favor of the defendant physician.
The defendant physician never challenged Dr. Kamelgard's testimony. But the defendant later filed a complaint with the American College of Surgeons (ACS), accusing Dr. Kamelgard of allegedly testifying falsely regarding relevant standards of care. The ACS decided to charge Dr. Kamelgard with violating its rules, but shortly before a scheduled hearing, lawyers intervened on Dr. Kamelgard's behalf. The ACS later dropped the case; no explanation was ever given.
Despite Dr. Kamelgard's requests, the ACS refused to provide him with a copy of the complaint against him, the identity of his accuser, or even the names of the three members of the ACS deemed qualified as bariatric surgeons to review the complaint for the college.
Dr. Kamelgard filed a petition seeking the identities of these three members. The ACS asserted that what was being sought was protected by the state's Medical Studies Act (MSA), its peer review statute.
According to court filings, the ACS admitted that no practice of medicine occurred in Illinois, that testifying equates to the practice of medicine, and that by testifying there Dr. Kamelgard practiced medicine in New York (though New York's statute defining medical practice does not include testifying). But even though he was not licensed in Illinois and had no connection to the state except belonging to the ACS headquartered there, the ACS wrote that any physician who becomes a member agrees to be bound by Illinois law. The ACS, which has over 74,000 members worldwide, suggests by this case that Illinois law governs its conduct.
In the Minnesota case, Dr. Yancey sued a Dr. Weis, and his expert, a Dr. Hardten, for defamation as a result of their filing an ethics complaint against him with the American Academy of Ophthalmology (AAO). At the time the ethics charge was filed, Dr. Yancey was the expert medical witness for the plaintiff in a malpractice case in which Dr. Weis was a defendant. (As with Dr. Kamelgard, this was the first time that Dr. Yancey had ever testified as a medical expert.) Dr. Yancey also asserted that the AAO violated its own rules when it handled the complaint against him, including not keeping the matter confidential.
After a jury returned a verdict for $3 million in favor of the plaintiff, the case was going to be retried on damages with Dr. Yancey again offering testimony. But a day before this was to occur, the AAO served on him the ethics charge Dr. Weis and Dr. Hardten had filed.
According to his lawyer, Dr. Yancey claimed the ethics charge was an attempt to force him to alter his testimony, and to chill his ability to testify in other, subsequent cases that may have come his way. The defendants moved to dismiss Dr. Yancey's complaint and, in the alternative, for the summary judgment.
In the Kamelgard case, which is pending in Illinois but now on appeal, it remains to be seen whether an Illinois court will opine on how the ACS believes the Illinois statute should be used. The Yancey case is also still pending.
State peer review statutes were enacted to maintain and improve health care by keeping the products of a peer review committee privileged from discovery. (The exception to this is when certain cases are litigated in federal court—see my column “A Matter of Privilege,” Jan. 15, 2008, p. 34.)
The Yancey and Kamelgard cases highlight attempts to redefine peer review statutes to include judging expert testimony within the practice of medicine. Such statutes were also not intended to apply solely because an organization is headquartered in a particular state without any health care rendered there, or to chill an expert from further testifying during the course of a legal proceeding.
These cases also show that professional medical organizations sometimes seek to muzzle health care providers when their testimony is inappropriate in the eyes of such organizations. This trend may be influenced in part by a resolution adopted years ago by the American Medical Association declaring that testifying is considered the practice of medicine.
Granted, some physicians don't belong in a courtroom offering expert testimony. However, the Kamelgard and Yancey cases illustrate the Damoclean swords that professional societies may think they can wield in order to prevent physicians from offering legitimate expert medical testimony. After all, giving expert opinion is not rendering patient care, and thus is not generally considered the practice of medicine under state law.
If you are a physician wishing to consult or testify, don't be dissuaded from doing so—provided that you review all medical records properly and thoroughly, you are well credentialed, and you are familiar with all applicable medical standards by way of background, experience, and training. In addition, consult not only with your own organizations as to their standards and policies on testifying, but also ask the lawyer who retains you what your state law requires of experts who testify in legal cases.
Peer review, which plays an important role in reviewing medical care in hospital settings, sometimes is abused and warped to a degree never envisioned by legislators.
Two examples now moving through state legal systems warrant attention. They are Joseph Kamelgard, M.D. v. the American College of Surgeons (Circuit Court of Cook County, Ill.), and Charles Yancey, M.D. v. American Academy of Ophthalmology, et al. (4th Judicial District, Hennepin County, Minn.).
In the Kamelgard case, Dr. Kamelgard, a well-regarded bariatric surgeon from New Jersey, testified for the first time as a medical expert in a malpractice lawsuit in federal court in Brooklyn, N.Y. The plaintiff, a New York resident, was cared for at a Staten Island hospital. The defendant was a physician who, according to court records, had been named previously in professional liability cases. The jury decided in favor of the defendant physician.
The defendant physician never challenged Dr. Kamelgard's testimony. But the defendant later filed a complaint with the American College of Surgeons (ACS), accusing Dr. Kamelgard of allegedly testifying falsely regarding relevant standards of care. The ACS decided to charge Dr. Kamelgard with violating its rules, but shortly before a scheduled hearing, lawyers intervened on Dr. Kamelgard's behalf. The ACS later dropped the case; no explanation was ever given.
Despite Dr. Kamelgard's requests, the ACS refused to provide him with a copy of the complaint against him, the identity of his accuser, or even the names of the three members of the ACS deemed qualified as bariatric surgeons to review the complaint for the college.
Dr. Kamelgard filed a petition seeking the identities of these three members. The ACS asserted that what was being sought was protected by the state's Medical Studies Act (MSA), its peer review statute.
According to court filings, the ACS admitted that no practice of medicine occurred in Illinois, that testifying equates to the practice of medicine, and that by testifying there Dr. Kamelgard practiced medicine in New York (though New York's statute defining medical practice does not include testifying). But even though he was not licensed in Illinois and had no connection to the state except belonging to the ACS headquartered there, the ACS wrote that any physician who becomes a member agrees to be bound by Illinois law. The ACS, which has over 74,000 members worldwide, suggests by this case that Illinois law governs its conduct.
In the Minnesota case, Dr. Yancey sued a Dr. Weis, and his expert, a Dr. Hardten, for defamation as a result of their filing an ethics complaint against him with the American Academy of Ophthalmology (AAO). At the time the ethics charge was filed, Dr. Yancey was the expert medical witness for the plaintiff in a malpractice case in which Dr. Weis was a defendant. (As with Dr. Kamelgard, this was the first time that Dr. Yancey had ever testified as a medical expert.) Dr. Yancey also asserted that the AAO violated its own rules when it handled the complaint against him, including not keeping the matter confidential.
After a jury returned a verdict for $3 million in favor of the plaintiff, the case was going to be retried on damages with Dr. Yancey again offering testimony. But a day before this was to occur, the AAO served on him the ethics charge Dr. Weis and Dr. Hardten had filed.
According to his lawyer, Dr. Yancey claimed the ethics charge was an attempt to force him to alter his testimony, and to chill his ability to testify in other, subsequent cases that may have come his way. The defendants moved to dismiss Dr. Yancey's complaint and, in the alternative, for the summary judgment.
In the Kamelgard case, which is pending in Illinois but now on appeal, it remains to be seen whether an Illinois court will opine on how the ACS believes the Illinois statute should be used. The Yancey case is also still pending.
State peer review statutes were enacted to maintain and improve health care by keeping the products of a peer review committee privileged from discovery. (The exception to this is when certain cases are litigated in federal court—see my column “A Matter of Privilege,” Jan. 15, 2008, p. 34.)
The Yancey and Kamelgard cases highlight attempts to redefine peer review statutes to include judging expert testimony within the practice of medicine. Such statutes were also not intended to apply solely because an organization is headquartered in a particular state without any health care rendered there, or to chill an expert from further testifying during the course of a legal proceeding.
These cases also show that professional medical organizations sometimes seek to muzzle health care providers when their testimony is inappropriate in the eyes of such organizations. This trend may be influenced in part by a resolution adopted years ago by the American Medical Association declaring that testifying is considered the practice of medicine.
Granted, some physicians don't belong in a courtroom offering expert testimony. However, the Kamelgard and Yancey cases illustrate the Damoclean swords that professional societies may think they can wield in order to prevent physicians from offering legitimate expert medical testimony. After all, giving expert opinion is not rendering patient care, and thus is not generally considered the practice of medicine under state law.
If you are a physician wishing to consult or testify, don't be dissuaded from doing so—provided that you review all medical records properly and thoroughly, you are well credentialed, and you are familiar with all applicable medical standards by way of background, experience, and training. In addition, consult not only with your own organizations as to their standards and policies on testifying, but also ask the lawyer who retains you what your state law requires of experts who testify in legal cases.
ERISA's Tangled Web
Can a managed care enrollee sue his plan if he is injured because of what he claims was the result of poor care and treatment by a plan physician? If he dies, can his estate sue the plan for damages?
Before 2004, the answers were uncertain. The legal cases that had been decided were definitely a mixed bag, depending upon whether the assertions against the managed care plan were found to involve strictly patient care, administrative decisions, or both.
Strict patient care would fall under state law governing medical negligence cases. If the allegations were solely administrative, the case would come under a federal statute known as the Employee Retirement Income Security Act, or ERISA.
ERISA was originally intended by Congress to govern the rights of pension plan beneficiaries. But legal cases morphed this legislation into protection for ERISA health plans against state-filed lawsuits based on medical malpractice.
When allegations involved both patient care and administrative decisions, some cases were not preempted by ERISA while others were—it depended on how the court interpreted what the injured party asserted. If the court decided that the lawsuit fell under ERISA, that party would be entitled only to the cost of the denied benefit (generally just the cost of the treatment or procedure in question). If ERISA did not preempt the lawsuit (or if the health plan was not governed by ERISA), the enrollee would be entitled to all remedies allowed under state law.
The landscape for these types of decisions changed in 2004, when the Supreme Court decided two cases—Aetna Health Inc. v. Davila and Cigna Corp. v. Calad—in which the patient sued for wrongful denial of coverage.
In the Calad case, Ruby Calad's physician recommended an extended hospital stay after Ms. Calad had a surgical procedure. The managed care plan, through its discharge nurse, thought the extension was unnecessary, and Ms. Calad was discharged from the hospital. Once home, she experienced postsurgical complications that required follow-up care.
In the Davila case, Juan Davila had various ailments, including diabetes, gastric ulcer disease, and arthritis. He was insured through Aetna's managed care plan. His physician, who was not in Aetna's network, recommended Vioxx (rofecoxib) for the treatment of his arthritis.
However, before allowing the use of Vioxx, Aetna required that Mr. Davila try two other medications, both less expensive than Vioxx. While on those “preferred” drugs, he experienced bleeding ulcers, internal bleeding, and a near heart attack. Because of the additional gastric impairment, he was no longer able to take medication absorbed through his stomach.
Both lawsuits eventually made their way to the Supreme Court, which decided that the lawsuits fell under ERISA and that both concerned benefits (coverage) promised to the plaintiffs. The suits were not interpreted as asserting inappropriate medical care and treatment. Therefore, the plaintiffs could seek only the benefits promised but not delivered and no other damages.
Justice Ruth Bader Ginsburg, citing the words of an appeals court judge in another case, said, “I also join 'the rising judicial chorus urging that Congress and [this] Court revisit what is an unjust and increasingly tangled ERISA regime.'” That is to say, ERISA has been interpreted to provide protections to managed care plans that were never intended.
This decision means that if a physician is named in a lawsuit together with a managed care plan, and the suit falls under the ERISA statute, the odds are great that the only exposure to both parties will be the cost of the benefit denied.
The physician might still be sued separately. But unless and until Congress revisits the ERISA statute, physicians might find that being part of an ERISA plan isn't such a bad position to be in.
Can a managed care enrollee sue his plan if he is injured because of what he claims was the result of poor care and treatment by a plan physician? If he dies, can his estate sue the plan for damages?
Before 2004, the answers were uncertain. The legal cases that had been decided were definitely a mixed bag, depending upon whether the assertions against the managed care plan were found to involve strictly patient care, administrative decisions, or both.
Strict patient care would fall under state law governing medical negligence cases. If the allegations were solely administrative, the case would come under a federal statute known as the Employee Retirement Income Security Act, or ERISA.
ERISA was originally intended by Congress to govern the rights of pension plan beneficiaries. But legal cases morphed this legislation into protection for ERISA health plans against state-filed lawsuits based on medical malpractice.
When allegations involved both patient care and administrative decisions, some cases were not preempted by ERISA while others were—it depended on how the court interpreted what the injured party asserted. If the court decided that the lawsuit fell under ERISA, that party would be entitled only to the cost of the denied benefit (generally just the cost of the treatment or procedure in question). If ERISA did not preempt the lawsuit (or if the health plan was not governed by ERISA), the enrollee would be entitled to all remedies allowed under state law.
The landscape for these types of decisions changed in 2004, when the Supreme Court decided two cases—Aetna Health Inc. v. Davila and Cigna Corp. v. Calad—in which the patient sued for wrongful denial of coverage.
In the Calad case, Ruby Calad's physician recommended an extended hospital stay after Ms. Calad had a surgical procedure. The managed care plan, through its discharge nurse, thought the extension was unnecessary, and Ms. Calad was discharged from the hospital. Once home, she experienced postsurgical complications that required follow-up care.
In the Davila case, Juan Davila had various ailments, including diabetes, gastric ulcer disease, and arthritis. He was insured through Aetna's managed care plan. His physician, who was not in Aetna's network, recommended Vioxx (rofecoxib) for the treatment of his arthritis.
However, before allowing the use of Vioxx, Aetna required that Mr. Davila try two other medications, both less expensive than Vioxx. While on those “preferred” drugs, he experienced bleeding ulcers, internal bleeding, and a near heart attack. Because of the additional gastric impairment, he was no longer able to take medication absorbed through his stomach.
Both lawsuits eventually made their way to the Supreme Court, which decided that the lawsuits fell under ERISA and that both concerned benefits (coverage) promised to the plaintiffs. The suits were not interpreted as asserting inappropriate medical care and treatment. Therefore, the plaintiffs could seek only the benefits promised but not delivered and no other damages.
Justice Ruth Bader Ginsburg, citing the words of an appeals court judge in another case, said, “I also join 'the rising judicial chorus urging that Congress and [this] Court revisit what is an unjust and increasingly tangled ERISA regime.'” That is to say, ERISA has been interpreted to provide protections to managed care plans that were never intended.
This decision means that if a physician is named in a lawsuit together with a managed care plan, and the suit falls under the ERISA statute, the odds are great that the only exposure to both parties will be the cost of the benefit denied.
The physician might still be sued separately. But unless and until Congress revisits the ERISA statute, physicians might find that being part of an ERISA plan isn't such a bad position to be in.
Can a managed care enrollee sue his plan if he is injured because of what he claims was the result of poor care and treatment by a plan physician? If he dies, can his estate sue the plan for damages?
Before 2004, the answers were uncertain. The legal cases that had been decided were definitely a mixed bag, depending upon whether the assertions against the managed care plan were found to involve strictly patient care, administrative decisions, or both.
Strict patient care would fall under state law governing medical negligence cases. If the allegations were solely administrative, the case would come under a federal statute known as the Employee Retirement Income Security Act, or ERISA.
ERISA was originally intended by Congress to govern the rights of pension plan beneficiaries. But legal cases morphed this legislation into protection for ERISA health plans against state-filed lawsuits based on medical malpractice.
When allegations involved both patient care and administrative decisions, some cases were not preempted by ERISA while others were—it depended on how the court interpreted what the injured party asserted. If the court decided that the lawsuit fell under ERISA, that party would be entitled only to the cost of the denied benefit (generally just the cost of the treatment or procedure in question). If ERISA did not preempt the lawsuit (or if the health plan was not governed by ERISA), the enrollee would be entitled to all remedies allowed under state law.
The landscape for these types of decisions changed in 2004, when the Supreme Court decided two cases—Aetna Health Inc. v. Davila and Cigna Corp. v. Calad—in which the patient sued for wrongful denial of coverage.
In the Calad case, Ruby Calad's physician recommended an extended hospital stay after Ms. Calad had a surgical procedure. The managed care plan, through its discharge nurse, thought the extension was unnecessary, and Ms. Calad was discharged from the hospital. Once home, she experienced postsurgical complications that required follow-up care.
In the Davila case, Juan Davila had various ailments, including diabetes, gastric ulcer disease, and arthritis. He was insured through Aetna's managed care plan. His physician, who was not in Aetna's network, recommended Vioxx (rofecoxib) for the treatment of his arthritis.
However, before allowing the use of Vioxx, Aetna required that Mr. Davila try two other medications, both less expensive than Vioxx. While on those “preferred” drugs, he experienced bleeding ulcers, internal bleeding, and a near heart attack. Because of the additional gastric impairment, he was no longer able to take medication absorbed through his stomach.
Both lawsuits eventually made their way to the Supreme Court, which decided that the lawsuits fell under ERISA and that both concerned benefits (coverage) promised to the plaintiffs. The suits were not interpreted as asserting inappropriate medical care and treatment. Therefore, the plaintiffs could seek only the benefits promised but not delivered and no other damages.
Justice Ruth Bader Ginsburg, citing the words of an appeals court judge in another case, said, “I also join 'the rising judicial chorus urging that Congress and [this] Court revisit what is an unjust and increasingly tangled ERISA regime.'” That is to say, ERISA has been interpreted to provide protections to managed care plans that were never intended.
This decision means that if a physician is named in a lawsuit together with a managed care plan, and the suit falls under the ERISA statute, the odds are great that the only exposure to both parties will be the cost of the benefit denied.
The physician might still be sued separately. But unless and until Congress revisits the ERISA statute, physicians might find that being part of an ERISA plan isn't such a bad position to be in.