"Workers should be able to apply the money the boss is paying for health coverage to a plan of their own choosing--whatever kind that might be."
THE ILLINOIS SUPREME COURT ruled in 1999 that the family of a woman who died after being denied a diagnostic test could proceed with a malpractice suit against her health plan; an Ohio jury awarded $51,500,000 in 1999 to the estate of a woman who died after her health plan refused to pay for chemotherapy; and a Federal appeals court ruled that same year that a family could sue its HMO because their two-day-old baby died after being denied an extended hospital stay--and you thought you couldn't sue your HMO.
Don't feel bad. You aren't the only one who thought that. In fact, most members of Congress seem to have the same misbelief. That's what is behind all the talk about a Patients Bill of Rights--that somehow, managed care plans are exempt from the accountability that controls every other part of Americans' economic lives.
Would it surprise you to discover that Congress has it wrong? That health plans can be subject to the same malpractice remedies as doctors and hospitals are? That HMOs are actually subject to more regulations than most fee-for-service plans are? That you can sue over contract disputes in Federal court even when your employer has an ERISA plan?
Don't take my word for it. The Supreme Court said the same thing in a unanimous ruling during the summer of 2000. In essence, the Court ruled that there are two kinds of lawsuits that may be brought against an HMO--one is for malpractice and the other is for contract disputes.
Contract suits can be brought in Federal court under the terms of ERISA (the Employee Retirement Income Security Act of 1974), the Federal law that controls employer-based benefit plans. At the time it was passed, Congress wanted to allow multistate employers to provide nationally consistent benefits, so it preempted state laws that relate to such plans. In so doing, Congress exempted employers from complying with state premium taxes, mandated benefits, and a whole lot of solvency and consumer protection laws, including state contract law.
ERISA replaced these state laws with Federal requirements so that all employers would face the same set of rules wherever they might be located. For contract disputes, such as whether a service is covered under the terms of the contract, workers may sue in Federal court and receive the cost of the denied claim, plus attorneys' fees.
Contract disputes aren't the big issue, though. If a health plan has a contract that says "we will only pay for services that we think are medically necessary," it hasn't violated the terms of its contract when it denies payment of a claim for what it thinks is a lack of medical necessity.
The real complaint against managed care is that HMOs sometimes get it wrong. They may decide a service isn't necessary when it really is. Patients may be hurt or killed because of that decision.
Making medical decisions is a fearsome responsibility. It is a matter of life or death. The right decision can lead to a full recovery, but a wrong one can result in death or a lifetime of misery and pain for the patient and his or her family. This is part of the reason doctors are so highly trained and so well paid. Not many people are able or willing to take such responsibility on their shoulders.
If a physician makes a bad medical decision and a patient is harmed, the doctor may be liable for malpractice. The physician can be sued and severe penalties be levied against him or her. These penalties may include compensatory damages, "compensating" the victim or his or her family for pain and suffering and/or loss of mobility, income, or companionship. The penalties might also include punitive damages--an amount of money awarded for no reason other than to punish the doctor for misbehavior and to warn other doctors to be more careful. …