Magazine article Insight on the News

Antitobacco Lawyer Files Suits against HMOs

Magazine article Insight on the News

Antitobacco Lawyer Files Suits against HMOs

Article excerpt

Health-maintenance organizations are under attack by class-action lawyers and politicians who argue that companies have reneged on promises to doctors and subscribers.

A veteran lawyer of the $246 billion tobacco settlement has filed lawsuits against five of the nation's largest health-maintenance organizations, or HMOs. Seeking class-action status on behalf of 32 million customers, the lawsuits are the latest in a nationwide attack on HMOs.

"We're acting today to fix the broken promises the HMO industry has made to the people who entrust their very lives to these companies," says Richard Scruggs, who leads a group of nine law firms that want HMOs to be more generous to their patients.

The lawsuits, filed in federal court in Hattiesburg, Miss., claim that Humana Inc., Prudential Health Care, Cigna Healthcare, Pacificare Health Systems Inc. and Foundation Health Systems Inc. violated antiracketeering laws and failed to provide promised health care. Overall, HMOs face up to 16 suits, most in federal courts. The managed-care industry also must cope with a massive political backlash. Congress is considering expanding subscribers' rights to sue their health plans under a "patients' bill of rights," and courts are allowing lawyers to use untested legal theories to bring HMOs to trial.

The new suits are based on laws like the landmark federal 1974 statute that governs pension and benefits plans. Some lawyers argue that the Employee Retirement Income Security Act means that HMOs have a "fiduciary duty" to provide complete information about benefits and cost controls to doctors and subscribers.

"I think our case should be of great benefit," says Joseph Sellers, a partner in the Washington-based law firm Cohen, Milstein, Hausfeld & Toll, which has filed suit in Miami against Humana Inc. "The relief is to ensure that HMOs are completely candid. That ought to be good for HMOs. It would bolster confidence in HMOs."

Lawyers for HMOs disagree, of course, claiming that lawsuits are damaging for consumers as well as companies. If HMO lawsuits succeed and the insurers have to pay big sums, the companies will pass the costs on to patients, says Phil Blando, spokesman for the American Association of Health Plans, which represents managed-care groups nationwide. "These types of actions border on extortion, and if pushed through, it will be working families that pay the price."

Other lawyers contend that the lawsuits are spurious. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.