Court to decide right to sue HMOs in states

The Supreme Court said yesterday it would decide whether some people who were denied medical benefits can sue health maintenance organizations under state law.

The court will hear arguments from insurers Aetna Inc. and Cigna Corp., which have argued that a 1974 federal statute blocks patients from suing in state court. Aetna is asking the court to throw out a Texas mans claim that he suffered stomach problems after his HMO refused to pay for the medication his doctor prescribed.

Cigna, meanwhile, will argue that the federal law known as the Employee Retirement Income Security Act, or ERISA, pre-empted a lawsuit filed by a Texas hysterectomy patient who said she suffered health complications after Cigna refused to pay for more than one day in a hospital.

Health care providers said allowing lawsuits at the state level will expand insurers liability and lead to higher costs for health care.

“What the ruling can do is determine the fate of the health care industry in this country, and the ability of employers to offer coverage without fear of lawsuits,” said Kate Sullivan, director of health care policy for the U.S. Chamber of Commerce.

For years, HMOs and patients have battled over whether cost-cutting by insurers has led to substandard coverage. In 2000, the Supreme Court ruled that patients cannot file such suits under federal law, but said states may set some requirements for how managed-care providers operate. But it has never been clear whether patients can sue health care providers in state court for the quality of coverage.

Texas resident Juan Davila said that in 2000 his doctor prescribed the painkiller Vioxx to relieve arthritis. According to the lawsuit, Aetna told Mr. Davila he would have to try a less-expensive drug before it would pay for Vioxx. Mr. Davila tried the cheaper drug, and was hospitalized for bleeding ulcers. He sued under a Texas law, blaming the drug for his stomach problems and claiming that Aetna failed to use “ordinary care” in making a medical decision.

A federal judge threw out Mr. Davilas case in 2001. But last year, the 5th U.S. Circuit Court of Appeals said he could pursue his claim because he is seeking damages unavailable under ERISA.

In its appeal to the Supreme Court, Aetnas attorneys said that ERISA already provides “remedies that Congress deemed appropriate for plans and their participants and beneficiaries.”

It would be wrong, Aetna argued, for states to provide additional benefits.

But patient advocates said there is nothing illegal about states allowing for actions beyond those provided by the federal government.

“Its really antidemocratic to shift this stuff to federal court,” said Steve Hitov, managing attorney for the National Health Law Program, which represents lower-income patients in health care cases. “Its not democratic and it doesnt make for good long-term public policy.”

Patient advocates said ERISA was not designed to govern the type of decisions that health care providers made in the Aetna and Cigna cases.

“What were talking about here is not really insurance,” said Lisa McGiffert, a senior policy analyst with Consumers Union. “Theyre making medical decisions based on financial reasons that can interfere with the quality of care.”

If the court rules against suits at the state level, patients will still be allowed to sue under ERISA, but only for the cost of treatment. They could not collect for pain and suffering or punitive damages.

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