Several legal obstacles to establishing the liability of Managed Health Care Organizations need to be removed by Political Means. Below are some suggested statutory changes. Please send comments to the webmaster.
A beneficiary can sue an EBP only to make it provide the benefits it has wrongly denied. No other (relevant to medical care) suits are allowed, and only equitable remedies are available. No damages are allowed.
Suggested Amendments to ERISA:
No federal law shall be construed to prohibit or limit the right of the courts of any state to adjudicate issues or disputes which arise regarding the extent or quality of health coverage delivered by any Managed Health Care Organization (MHCO) subject to the Employee Retirement Income Security Act of 1974 (29 USC 1001 et seq) (ERISA), or the standard of care under applicable state statutory or common law.
For the purposes of this Act and 29 USC 1132(a)(1)(B), "benefits" as applied to medical care, shall not be construed as any provision of or reimbursement for a specific diagnostic or therapeutic medical service; but shall be construed only as membership in an MHCO, payment of insurance premiums, or provision of any other plan for medical care provided by an employer.
No claim or claims related to denial, delay or quality of a specific diagnostic or therapeutic medical service or reimbursement or payment therefor shall be considered to be covered by 29 USC 1132(a)(1)(B), nor shall be subject to preemption under 29 USC 1144(a), nor shall be a basis for removal to federal district court under 28 USC 1441.
Any individual who suffers personal harm as a direct result of any violation of this statute may, in a civil action against the plan, its employees, agents and/or contractors, obtain those damages available for personal injury under the law of the state in which the defendant is located, and such equitable relief as is appropriate.
Current Law allows States to regulate Insurance companies, but doesn't allow ERISA MCO's to be so classified. Now states can regulate insurance policies BOUGHT by plans subject to ERISA, but can not regulate identical services provided DIRECTLY. (See Metropolitan Life v. Mass.)
Suggested Amendment to ERISA:
In the case of MCO's connected with Employee Benefit Plans subject to ERISA, which directly provide medical benefits similar to those ordinarily provided by medical insurance companies, the exception of ERISA 514(b)(2)(B) shall not apply, and the MCO shall be subject to state insurance regulations.
If an MCO forces a patient out of the hospital, for example, the burden of any suit for resulting damages should not be borne by the hospital and the discharging doctor alone.
Suggested Statutory Clause:
A MCO shall be jointly and severably liable for any acts or
omissions of the organization itself, its employees, independent contractors,
agents, ostensible agents, administrators, reviewers, and any persons or
entities providing services to or for the MCO.
In California, the express protection from vicarious liability
conferred upon HMOs by the Knox-Keene act (HSC 1371.25) should be repealed.
MCO's either have UR done by their own employees, who are easily influenced by management to reject benefits, or by companies with whom the MCO contracts, and who may be fired if they don't reject enough cases.
Suggested Statutory Clause:
Utilization Review (UR) Organizations shall register with and be approved by the Dept. of Health.
No person shall sit on a UR committee who is not a licensed physician.
No MCO, or other party in interest, shall do its own UR.
No URO shall contract directly with any MCO.
When UR is required, a URO shall be selected randomly by the Dept.
Compensation of the URO shall be unaffected by the decision it has made in any case.
MCO's either manage their own arbitration, giving them excessive leverage over the results, or use outside organizations, retaining the right to refuse to use any arbitrator who has ruled against them in the past. See Engalla v. Kaiser to see how severely an MCO can corrupt the Arbitration process.
Suggested Statutory Clause:
Arbitration Organizations (AO) shall register with and be approved by the Dept. of Corporations.
No MCO shall manage its own arbitration.
No AO shall contract directly with any MCO.
When arbitration is required, an AO shall be selected randomly by the Dept.
The AO shall choose 3 arbitrators. No arbitrator may be chosen by either party. Each party may challenge any arbitrator for cause, but there shall be no peremptory challenges.
If any party fails to meet any of the time limits imposed by the arbitrators or the arbitration agreement, the other party may immediately terminate arbitration and file suit.
Better to litigate for payment than for wrongful death.
Suggested Statutory Clause:
In the case of urgent treatment, denied by an MCO, expedited arbitration shall take place within a time frame which will allow the treatment to be given, if approved by the arbitration board, within the period during which it may still be effective.
Some contracts forbid the MCP from telling patients about alternative treatments the MCO doesn't want to pay for. Some clauses forbid doctors to say anything publicly which may tend to discourage enrolments or reflect adversely on the MCO.
Suggested Statutory Clause:
A clause in any contract between a Managed Care Organization (MCO) and a Health Care Provider (HCP) which attempts to limit in any way the communication between the HCP and a patient shall be void.
Withholding of relevant information from a patient by an HCP shall give rise to a presumption of lack of informed consent.
No HCP shall be fired or otherwise terminated by any MCO because of any communication by the HCP to a patient or the public.
For example, if a state wants to inhibit the use of capitation, it could simply require that doctors accepting global capitation must meet the capitalization and solvency requirements of a similarly sized insurance company. They are, after all, accepting their patients’ financial risk. Of course, most doctors could not meet those requirements, so the untouchable HMOs would be indirectly prevented from demanding such contracts of doctors.
The way large Plans avoid being subject to state regulation, is by hiring an HMO as an "administrator", and using another or the same one to re-insure their risk, and calling themselves "self-insured". There is a bill before the 105th Congress which would extend this ploy to groups of small businesses, for the express purpose of defeating state regulation.
The way around this would be to define the HMO "Administrators" as being in the business of insurance (i.e.: doing everything but assuming the risks) and subjecting them to insurance regulation in the same way as an HMO that contracts with the Plan for full coverage. Nothing in ERISA prevents that.
The Supreme Court has decided (Met Life v. Mass. 471 US 724) that ERISA is to use the "business of insurance" definitions of the McCarran Ferguson Act (15 USC 1011).
Cases interpreting the scope of the McCarran-Ferguson Act have identified three criteria relevant to determining whether a particular practice falls within that Act's reference to the "business of insurance":
The suggestions above would seem to fall well within the limits defined by these criteria.
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