Tuesday, May 27, 1997

NEW YORK -- If you've joined a health maintenance organization (HMO) offered by your company, you have to hope that its managers are truly committed to quality care.

If the HMO treats you negligently, you may find you have nowhere to turn. Patients in a few states have recently acquired more legal rights, but that's cold comfort for everyone else.

Just ask Florence Corcoran of Louisiana, who had two high-risk pregnancies. The first time, she was hospitalized close to her delivery date. When her fetus showed distress, her doctor saved it with an emergency Caesarean delivery. The second time, he wanted her hospitalized again.

But her HMO said a hospital stay wasn't medically necessary and authorized 10 hours a day of home-nursing care. While the nurse was off-duty, the fetus suffered distress and died. Due to a quirk in the law, Corcoran wasn't allowed to bring a malpractice suit against the HMO.

The same quirk protected the HMO that insured the late Buddy Kuhl of Kansas City, Mo. After he had a heart attack, his doctors recommended complex surgery at a particular medical center. The HMO refused because the center was out of its service area.

Eventually it agreed, but by then Kuhl's disease had progressed so far that a transplant was his only hope. The HMO again refused and he died, waiting.

The quirk in question is ERISA -- the Employer Retirement Income Security Act of 1974. ERISA was passed to force companies to pay employees the pensions they promised. It covers all employee benefit plans, including health plans.

Lawsuits under ERISA normally have to be brought in federal courts but medical malpractice isn't a federal issue. It's a state issue. As soon as the HMO gets into federal court, poof! Malpractice goes away.

Patients with individual health insurance can bring malpractice suits against HMOs. The law has limited only those in employer plans.

These same prohibitions apply to disability insurance bought through employer plans. "The insurance companies are immune from damage claims even if they refuse to pay benefits for years while the disabled person fights," says attorney Cameron Tyler of Greenstein and Tyler in Boulder, Colo.

You may have read about an $89 million malpractice judgment won by the estate of the late Nelene Fox, a public schoolteacher in Temecula, Calif., against her HMO.

But her estate sued under an ERISA loophole, which lets state-government employees bring state claims. Had Nelene Fox been Buddy Kuhl, her case would have been thrown out of court.

You can still sue a doctor for malpractice, if he or she misdiagnoses you or mishandles your case. Doctors are also liable if they don't tell you about a potentially valuable treatment or fail to protest if the HMO won't authorize it. But they risk their careers if they challenge their HMO too often.

"That's Catch-22," Carol O'Brien, senior attorney at the American Medical Association in Chicago, told my associate, Kate O'Brien Ahlers. "We know of cases where doctors have vigorously advocated for patients and been terminated from the HMO. That's financial suicide."

In federal court, you can sue HMOs for only one thing: refusing to cover a medical bill for treatment you had and that you believe comes under the plan.

Even if you win, you can only recoup the benefit's cost. As an example, say your wife is sick but the HMO won't authorize a blood test. Eventually, you pay for the test yourself. It reveals a fatal disease that is now too advanced to cure. All you can recover is the $150 the blood-test cost.

In a case like Kuhl's, where the patient died because the HMO delayed critical treatment, courts in most states "can do nothing but slap the HMO on the wrist," says attorney Sheldon Weinhaus of Weinhaus and Dobson in St. Louis. He says that the hard-nosed HMOs are "the Jack Kevorkians of our times -- but at least Kevorkian gets the patient's permission."

In the past two years, two federal circuit courts have concluded that HMOs can indeed be sued for malpractice when one of their doctors errs. Those decisions cover nine states -- Delaware, New Jersey, Pennsylvania, Colorado, Kansas, New Mexico, Oklahoma, Utah and Wyoming. In a third circuit, cases have gone both ways, as have individual cases in a few other state courts.

If you live in a patient-friendly state, however, your HMO contract may require you to go to arbitration rather than court. That's faster and cheaper and has produced some attractive awards. But there's still a problem, says attorney Sharon Arkin of Shernoff, Bidart, Darras & Arkin in Claremont, Calif. The way the panels are constructed generally favors the HMOs.

HMO Appeals Process Tougher for Employees

Thursday, May 29, 1997

NEW YORK -- One thing everyone knows about health maintenance organizations (HMOs) is that treatment is denied far more often than in traditional plans.

Sometimes the HMO doesn't cover the treatment your doctor advises. Sometimes it could be covered but the HMO takes another view.

Not to worry, says the HMO. Turndowns can be appealed to a review board. You also assume that, in extremis, you can sue.

But the deck is stacked against you when your HMO is part of an employer plan. The appeal you innocently present may keep you from winning a court case, even if your position is right.

Here are two examples of what you're up against when you appeal the HMO's decision not to pay for treatment:

1. You're rarely given anything more than general information about how to make your case. You don't have the plan's formal standards or definitions -- only a brief summary in your plan handbook. You also don't have the information the HMO relied on when it turned you down.

Yet at the appeal, you won't succeed unless you rebut these mystery standards and definitions point by point, with witnesses and medical research. Furthermore, the standards are so broad that the HMO has a lot of discretion.

That's the experience of Carroll Duncan, 63, of San Marino, Calif. -- wheelchair bound, with cerebral palsy, and newly diagnosed with prostate cancer. Because of his health, his doctor advised proton beam radiation rather than X-ray radiation.

HMOs don't cover experimental treatments. Duncan's insurer, Prudential Health Care Plan of California, said that particular therapy was experimental and it wouldn't pay (although Duncan's doctor testified that PruCare had paid in other cases).

Duncan mounted his appeal without a detailed definition of "experimental" and no information about PruCare's case against that treatment. He showed that the therapy was offered at 13 medical centers and is covered by Medicare, but that wasn't enough.

Duncan had the treatment, shouldering the $45,450 cost. He sued PruCare for payment, was denied and has appealed to a higher court. Why did he lose? Because PruCare -- like most health plans offered by employers -- has the right to interpret what its contracts mean. If there's doubt about whether "experimental" describes a particular case, federal law resolves it on the insurer's side, says Duncan's co-counsel, Sharon Arkin, of Shernoff, Bidart, Darras & Arkin in Claremont, Calif.

PruCare spokesperson Kevin Heine says that Duncan had other options and that the definition of "experimental" would have been available if he'd asked.

But how many patients know to ask or how to use it while developing their appeal?

2. You have to appeal a turndown within the HMO. But believe it or not, the evidence you present may be the only case you will ever be allowed to make -- even if you go to court.

Take Joseph Chambers, 69, of Lindsborg, Kan., diagnosed with a rare and usually fatal lung disease. The only treatment other than a transplant was ruled experimental by his HMO, the Family Health Plan Corp. (now called Healthcare America Plans, in Wichita, Kan.).

Chambers' son Jeff filed a grievance with the HMO on his sick father's behalf. He had roughly one week to prepare his case, which consisted principally of information supplied by the doctor who would perform the surgery.

The HMO refused again. Chambers had the operation, then sued his HMO to recover the $80,000 cost (to pay part of it, he literally mortgaged the farm). He lost both the lawsuit and the appeal.

Why did he lose? Because under the federal law that governs employee health-care plans, the court can usually make only one decision: Did the HMO reach a reasonable conclusion based on the information before it?

Magistrate Judge Karen Humphreys, who heard Chambers' court case, found the HMO's investigation deficient. But based on the "incomplete and inadequate" information before it, she ruled that the HMO had made a legally acceptable decision.

In an unusual coda to her decision, Humphreys called the outcome "unfair" and the HMO wrong. Additional evidence showed that the treatment was in fact well-accepted. But her hands were tied.

Given such a law, HMOs have a built-in incentive to perform weak investigations of treatments they don't want to pay for.

Chuck Millsap, an attorney for Healthcare America, said that in a dispute, "both sides have an obligation to contribute to the administrative record" and adds that the judge's comments didn't refer to anything in the record.

Anyone going before an HMO appeals board "needs a medical expert from day one and perhaps a lawyer to argue your case," says Chambers' lawyer, Michael Herd, of Curfman, Harris, Rose & Smith in Wichita. But who tells patients that?

Copyright 1997 Washington Post Writer's Group