Until recently, courts have ruled that the law alone governs employee benefits, including health care, and that state liability laws do not be apply to HMOs. But the law, designed mainly to enforce contractual fulfillment, does not provide for the recovery of actual or punitive damages. As long as HMOs execute their contracts, which generally give them autonomy over coverage decisions, patients cannot recover damages. And even when HMOs do not adhere to these obligations, they are liable only for "contractual damages," the actual cost of the denied treatment or test, not for any consequential harm.
Recent court decisions, however, have determined that state laws might address the quality of medical care and medical negligence. Ohio lawmakers have responded by introducing four separate HMO liability bills.
The author of one of these bills, Rep. Jeff Jacobson, R-Vandalia, hopes that the legislation will cause HMOs to carefully consider the consequences of their coverage decisions.
"They have been making decisions in a vacuum, with no accountability," he said. "If one of these bills passes, maybe they will stop being so cavalier about decisions affecting people's lives."
Physician and Texas Sen.
David Shibley thinks that his state's law, enacted in 1997, has had exactly that effect.
"Physicians have reported receiving more attention from medical care reviewers when requesting necessary medical care for patients," Shibley said.
But some feel that these laws will merely add to the flood of expensive, often unnecessary lawsuits. Tim Snyder, director of state government affairs for ChoiceCare/Humana, said his company is quite concerned about the potential cost of lawsuits.
"There is limited money in the health-care environment," Snyder said. "It should be spent on patients, not on $120 million lawsuits."
The health-care industry thinks that the proposed statutes could impact both doctors and patients. The Ohio Association of Health Plans, an industry lobbyist, claims that HMOs will be forced to name the physician in lawsuits for which the doctor's portion of the defense costs could range from $500,000 to $1 million. The association also predicts that litigation expenses and jury awards could raise health-care costs by 5 to 8 percent.
But the experience indicates that the increase is negligible. In Texas, where the health-care industry predicted that Shibley's HMO liability law would drive premiums up 4 to 5 percent, they have risen just .3 percent.
And government employees, because their benefits have never been governed by the federal law, have always had the right to sue their HMOs. A 1997 study conducted in part by Harvard University determined that not only does this group pay just 13 cents per month for the right to sue, but also that this right has not translated into a flood of lawsuits. The number of lawsuits brought against the HMOs was less than 1.4 per year for every 100,000 enrollees.
Each of Ohio's pending HMO liability bills also proposes measures that would enable patients to appeal coverage denials to external, unbiased committees. Most HMO contracts stipulate that enrollees are bound by the rulings of internal review panels. Jacobson emphasizes that these appeal provisions should alleviate concerns about an increase in lawsuits.
"Nobody wants lawsuits," Jacobson said. "We want to resolve treatment issues while the patient can still benefit from the treatment, not in a courtroom."
Jacobson recognizes that his HMO liability bill probably will not be passed into law. But Speaker Pro Tempore Randall Gardner, R-Bowling Green, has adopted Jacobson's bill almost verbatim, into his own legislation. Because of his leadership position in the House, Gardner's bill stands a good chance of passing.
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