News
Insurance
Jun. 21, 2002
Ruling Allows HMO Patients To Demand a Second Opinion
LOS ANGELES - Managed care patients in California and 41 other states that have laws protecting their rights celebrated a victory Thursday with a U.S. Supreme Court decision that helps them fight their HMOs to get second opinions.
The 5-4 ruling allows health maintenance organization members, in states that have these laws, to override their plans' rejections of payment or treatment when an independent review shows a surgery or other care is justified. Rush Prudential HMO Inc. v. Moran, 2002 DJDAR 6898 (U.S., June 20, 2002).
The decision gives consumer advocates a victory at a time when broader patients' rights legislation has stalled in Congress.
"We are pleased with the result," said Daniel P. Albers of Barnes & Thornburg in Chicago, who represented Debra Moran in the underlying case. "The principle at stake is one that is important to independent insurers, physicians and insurers across the country."
Moran used the Illinois law allowing for second opinions to force her health plan, Rush Prudential HMO Inc., to reimburse her for a $95,000 operation that fixed a rare, debilitating nerve problem, which began in 1995.
She resorted to the tactic after three years of physical therapy and other treatments by her primary care doctor failed to relieve the pain in her arm, and her carrier refused to pay for a second opinion or the ensuing surgery that the new doctor recommended. So she paid herself and sued.
After numerous court rulings, the 7th U.S. Circuit Court of Appeals in Chicago eventually sided with Moran, stating that she was entitled to review and reimbursement.
The Supreme Court focused on whether a 1974 federal law governing most employee benefit plans, known as the U.S. Employee Retirement Income Security Act or ERISA, overrules state laws on independent reviews.
Determining that it did not, the court rejected arguments by Rush Prudential, which has been purchased by Wellpoint Health Network.
"Congress demonstrated an awareness of HMOs as risk-bearing organizations subject to state insurance regulation," Justice David H. Souter wrote for the majority.
The American Association of Health Plans, which represents managed care providers said in a statement, "This decision makes more difficult the goal of a uniform independent review process to protect patients."
The association argued that HMOs were not opposed to independent review but wanted one national standard instead of a hodgepodge of state laws.
The Health Care Insurance Association of America, which also represents managed care companies, warned that the decision will "add greater cost and complexity" to health-insurance coverage.
But advocates of the high court ruling hailed the decision as a benefit for both patients and physicians.
Sharon J. Arkin of Robinson Calcagnie & Robinson in Newport Beach, who filed an amicus brief in the case, said California's law is identical to the one in Illinois, which upheld independent review in the case of Moran.
"Under California statutes," Arkin said, "the Department of Managed Care released a study over the past few months that showed ... more people are getting care who were previously denied [before the law was enacted].
"Obviously, over the long term, HMOs will be more cautious in their denials."
However, Arkin said, the Supreme Court didn't go far enough in addressing whether the state law could be used to fight HMOs to pay for additional remedies that arise because the carrier delayed treatment in the first place. Those remedies, she said, could cover the loss of a job because the patient was unable to work, additional physical or emotional injury due to delay in treatment and punitive damages.
Joining Souter's majority opinion were Justices Stephen G. Breyer, Ruth Bader Ginsburg, Sandra Day O'Connor and John Paul Stevens.
Justice Clarence Thomas dissented, joined by Chief Justice William H. Reinquist, Justices Antonin Scalia and Anthony M. Kennedy.
The Associated Press and Bloomberg News contributed to this story.
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Susan Mcraen
Daily Journal Staff Writer
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