A Federal Court Opens a Narrow Window for Patient Suits

Article excerpt

When Texas enacted the first HMO liability law in 1997, Aetna promptly sued, claiming that statute was pre-empted by federal law Now, in a major test case, a US court of appeals has interpreted the relationship between federal and state authority.

It amounts to a fine line. The court upheld patients' right to hold an HMO vicariously liable for a treating physicians negligence in providing care, but struck down a provision that allowed patients to seek independent review of treatment denials or coverage questions. Texas law imposes "liability (on HMOs] for a limited universe of events," the court noted, and its provisions do not include "claims based on a managed care entity's denial of coverage for a medical service recommended by the treating physician: That dispute is one over coverage specifically excluded by the [law]:' With similar reasoning, the court struck down a portion of the Texas law that gave patients the right to appeal adverse determinations to independent reviewers.

The Texas law also forbids HMOs to use language in physician contracts that holds the plans harmless for their own acts, and it prevents HMOs from retaliating against doctors who advocate for patients. In their ruling, the justices overturned, in part, a lower court finding that declared the antiretaliation provision protected by federal law Those two clauses "complement the [law's] liability provisions by realigning the interest of managed care entities and their doctors," the appellate court noted. …