High court limits patient suits against HMOs

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A unanimous U.S. Supreme Court ruled on Monday that patients cannot sue health insurance companies under state law for refusing to pay for doctor-recommended medical care, a decision that could affect millions of patients.

The justices ruled that the 1974 federal law, ERISA (Employee Retirement Income Security Act), completely pre-empted such lawsuits brought in state court by patients who seek damages for the denial of appropriate medical care.

The decision was a victory for the U.S. Justice Department and insurers, which warned that allowing the lawsuits would drive up health care costs. Millions of Americans have medical insurance through employer-provided health plans governed by ERISA.

At issue was a 1997 Texas law that allowed patients to sue over their medical treatment. Nine other states - Arizona, California, Georgia, Maine, New Jersey, North Carolina, Oklahoma, Washington, and West Virginia - have similar laws.

The state laws have become important as Congress has been unable in recent years to adopt national legislation that would allow patients to sue their health maintenance organization in federal court for medical malpractice.

Supporters of the state laws argued that patients should be able to sue their managed care plans for the harm caused when needed health care has been denied.

The pair of cases involved units of Aetna Inc. and Cigna Corp.

One lawsuit had been brought by Juan Davila, who was covered by an Aetna health maintenance organization through a plan provided by his employer.

In 2000, Davila’s primary care physician prescribed the painkiller “Vioxx” for his arthritis. Before filling the prescription, Aetna required Davila to try two other less expensive medications.

After three weeks on the cheaper pain reliever, Davila was rushed to the emergency room, suffering from bleeding ulcers.

The other lawsuit involved Ruby Calad, who was discharged from the hospital in 1999 after a hysterectomy. Cigna’s nurse decided the standard one-day hospital stay would be sufficient, although Calad’s doctor had recommended a longer stay.

Several days after her release, Calad suffered complications. She then sued.

In an opinion by Justice Clarence Thomas, the justices reversed a U.S. appeals court ruling that the two lawsuits could proceed.

The Justice Department argued that allowing lawsuits under the state law would undermine the system set up by Congress under the 1974 federal law to encourage employers to adopt health insurance plans for their employees. 

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