HMO suit rulings seen as skirting state law
By Trebor Banstetter
Star-Telegram Staff Writer
A series of recent court decisions shifting cases to federal courtrooms has diluted the power of the Texas patients' bill of rights, which allows people to sue HMOs for medical malpractice in state court, some attorneys say.
"The federal courts are frustrating enforcement of the Texas liability provisions designed to hold HMOs accountable."
-George Parker Young
Fort Worth attorny
Of the 17 lawsuits filed against HMOs under the patient protection act, judges have allowed six to be heard in federal court under a 1974 federal law instead of the Texas measure. Only four suits are pending in state courts; the rest were settled.
In federal court, patients cannot win damages against HMOs for dangerous or deadly medical decisions. They can receive only the cost of the medical service that was denied.
"This is the big shield for the HMOs," said Fort Worth attorney George Parker Young, who specializes in suing the managed-care industry. Young says the spate of decisions "in large part nullifies" the state law, which was hailed as a victory for managed-care consumers when the Texas Legislature passed it in 1997.
The issues faced by HMOs and lawyers in Texas have become part of a national debate as Congress mulls a federal measure that would allow litigation against managed-care plans. Democrats are backing a bill that would allow suits in state court, where larger damages are likely; Republicans want to restrict lawsuits to federal court.
The Texas law has been closely watched since its inception in 1997, because it was the first of its kind. George W. Bush touted the law during his presidential campaign as a fair way to allow patients to address HMO decisions in state court after other avenues have been exhausted.
Young, who is regarded as the godfather of the anti-HMO legal industry in Texas, has represented patients in more than half the cases filed under the state law.
"The federal courts are frustrating enforcement of the Texas liability provisions designed to hold HMOs accountable," he said.
One such decision was made last week in a case involving Ruby Calad, 46, of Sugar Land.
Calad sued Cigna Healthcare of Texas last year after the HMO decided that she did not need a lengthy hospital stay after having a hysterectomy. She developed complications and had to be rushed back to the hospital three days after being discharged, according to the suit.
On June 22, Judge Barefoot Sanders of the U.S. District Court in Dallas ruled that Calad's lawsuit should be heard in federal court under the Employee Retirement Income Security Act of 1974, which governs employer-paid pension plans and health plans.
The decision was a big victory for the HMO, because lawsuits brought under ERISA can demand payment only for the medical service that was denied. The courts cannot award damages.
That means a case that might result in millions of dollars in damages in state court would, in federal court, simply net the cost of the medical service that had been denied -- rarely more than a few thousand dollars.
"ERISA has been a thorn in the side of plaintiffs attorneys," said Lee Cusenbary, an attorney who specializes in health issues for Cox & Smith in San Antonio. "The HMOs always want to move these cases to federal court because the damages will be so much less."
Health plans say the decisions to hear the lawsuits as ERISA cases have been appropriate.
"If there's an employer plan involved, then ERISA is the appropriate venue," said Leah Rummel, executive director of the Texas Association of Health Plans. "That's why we've seen judges ruling in that direction."
One frustration for lawyers has been a lack of consistency in the decisions. No uniform guideline has emerged as to which court is the appropriate venue for an HMO case -- the decisions rest entirely on the judge's interpretation of law.
So some lawsuits have been deemed federal cases while other similar suits have remained in state court.
"There has been no consistency in this," Young said.
Dallas district judges Sanders, Jorge Solis and Sidney Fitzwater have made recent HMO decisions.
Other HMO lawsuits moved to federal court include:
A Fort Worth case in which a misdiagnosis of a congenital heart defect led to an infant's death. The plaintiffs, Angela and Kasey Carpenter, claim that their HMO -- Harris Methodist Health Plan, now owned by PacifiCare Health Systems -- gave the doctor financial incentives not to provide adequate medical tests that could have saved their baby's life.
A Fort Worth case against Aetna U.S. Healthcare, in which the patient, Juan Davila, claims that the HMO refused to allow his doctor to prescribe medication. Davila suffered gastric bleeding and almost died.
A Dallas case against Humana Health Plan of Texas in which Gwen Roark claimed that the HMO delayed authorizing wound care that resulted in the amputation of her leg.
Managed-care companies are bitterly fighting a proposed federal law, backed by Democrats and under debate in the U.S. Senate, that would allow patients to sue HMOs in state courts for treatment decisions that result in illness or death.
Bush has threatened to veto any bill that allows patients to sue HMOs in state courts.
Critics of the federal law say it will push up the cost of health insurance and could force many small employers to drop benefits altogether.
But consumer advocates and attorneys say patients need to be able to sue their health plan in state court if they want to keep them from putting finances before medicine.
"Unless true accountability for an HMO's improper medical decision is made part of a patients' bill of rights," Young said, "managed-care entities will have no incentive to prevent tragedies such as Ms. Calad's."
Trebor Banstetter, (817) 390-7064