- The Washington Times - Thursday, January 17, 2002

Supreme Court justices yesterday probed the arcane world of insurance law in search of legal answers to a political issue that stymied Congress whether states may force HMOs to accept second opinions on medical care.
Justices sparred over whether health maintenance organizations were insurance companies in reviewing whether an Illinois requirement similar to those in 37 states and the District of Columbia was barred by the federal law that regulated employee retirement and health plans.
The appeal involved state intervention in the treatment of Chicago speech therapist Debra C. Moran, whose husband's health plan was forced to repay $94,841.27 charged by Norfolk microsurgeon Julia Terzis for specialized surgery to relieve a compressed nerve.
"I was in excruciating pain," Mrs. Moran said after yesterday's hearing. She may have to return the money if she loses in the Supreme Court.
Rush Prudential HMO Inc. initially refused to pay for that 1995 treatment of Mrs. Moran's brachial plexopathy and thoracic outlet syndrome, which caused pain, numbness and loss of mobility. The health maintenance organization proposed a less-costly alternative, removing the uppermost rib to decompress the affected nerve.
"All she sought here [was] a procedure that also saved her right arm," argued Mrs. Moran's attorney, Daniel P. Albers of Chicago, who said her case was unique in Illinois.
Rush's attorney, John G. Roberts Jr. of Washington, sought to refocus the discussion on the exclusive nature of the 1974 Employee Retirement Income Security Act, known as ERISA. He said state laws impermissibly change basic terms of the HMO contract.
"Illinois law seeks to impose a different remedy. The Illinois law is thus pre-empted," Mr. Roberts said. He said requiring that a physician arbitrate HMO disputes with its members imposes a new decision maker. "He's deciding whether there is coverage."
When Justice Sandra Day O'Connor asked the status of congressional legislation to permit states to require second opinions, Mr. Roberts replied, "At various times, passage is imminent and it falls apart."
The American Medical Association supports states that want "independent review." Plans similar to Mrs. Moran's cover 119 million people.
"America's patients need independent-review laws to protect them from potential managed-care abuses. Medical-treatment decisions should be made by the patient's physician, not by a managed-care administrator who might deny or delay proper patient care because of cost considerations," AMA secretary-treasurer Dr. Donald J. Palmisano said.
Justices O'Connor and Ruth Bader Ginsburg questioned why treatments were "medically necessary" when lower-cost alternatives provided nearly equivalent results.
"If a treatment were equally effective and less expensive, [the alternative] would not be a medical necessity," Justice Ginsburg told Mr. Albers.
Justice O'Connor said some alternatives that were slightly less effective but had fewer risks also might be worthy substitutes.
Mr. Albers said he couldn't explain how physician arbitrators balanced such considerations.
Those questioning how HMO coverage could be defined as insurance included Justices O'Connor, David H. Souter, Stephen G. Breyer and Antonin Scalia.
"Why is this insurance?" asked Justice Breyer, who had extensive insurance investments before coming to the high court. "Every company that sells a product with a warranty is, to that extent, an insurer."
Justice Scalia asked the difference between HMOs and law firms providing prepaid benefits, like those some unions contract for members at a fixed fee. He asked Mr. Albers if the law firms were insurance companies.
"I don't think so," the lawyer replied.
"What is insurance?" Justice O'Connor asked Mr. Roberts.
"Rush provides coverage, not care. But that is not insurance," Mr. Roberts replied.
Justice Scalia asked why a state that cannot require lawsuits may dictate an arbitration system.
While pondering the Illinois case, the court put on hold a separate appeal of a decision by the U.S. 5th Circuit Court of Appeals in New Orleans overturning a similar Texas law after a challenge by Aetna.

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