California Court Upholds Patient’s Right to Sue an H.M.O.

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The New York Times

In a decision that makes it easier for Medicare patients to sue their health maintenance organizations, the California Supreme Court ruled yesterday that the widow of an Orange County businessman was entitled to seek compensation under state tort laws.

Critics of H.M.O.’s said the 5-to-2 ruling was part of a trend by courts to scale back the immunity from lawsuits that has protected managed care companies.

But Jon N. Manzanares, a lawyer for the defendant, PacifiCare Health Systems, said the decision in the case, Barbara McCall v. PacifiCare of California, was “ripe for review” by the United States Supreme Court.

Mrs. McCall’s husband, George, of Costa Mesa, died at age 58 in 1999 after a lung transplant that he had sought for two years. During that time, he contested a refusal to approve the transplant by his doctor and PacifiCare, the country’s largest operator of Medicare H.M.O.’s.

Carol S. Jimenez, the McCall’s lawyer, said: “The floodgates are now open. H.M.O.’s will be held accountable.” Ms. Jimenez said that Mr. McCall was able to get on a waiting list for a transplant only after he disenrolled from the H.M.O. and applied under traditional Medicare.

He had Medicare disability coverage because a progressive lung disease prevented him from working.

The court majority yesterday upheld an appeals court ruling that Mr. McCall had the right to sue in state court. A PacifiCare administrative process had supported the denial by his doctor, Lakshmi Shukla of Greater Newport Physicians Inc., and PacifiCare.

PacifiCare, based in Santa Ana, Calif., said in a statement that the ruling “disregards Congressional mandate and key U.S. Supreme Court decisions regarding Medicare coverage determinations.”

The majority opinion said there was disagreement among state and federal courts on whether claims against a Medicare H.M.O. had to be reviewed under Medicare administrative procedures. But Ms. Jimenez said that “every federal court had ruled that patients could sue a Medicare H.M.O. for medical damages.”

The dissenting court minority said the decision disregarded the intent of Congress and “all but assures that Medicare’s administrative process will cease to function as a meaningful limit on judicial review.”

Jeffrey Ehrlich, a plaintiff’s lawyer in Claremont, Calif., with Shernoff, Bidart & Darras, said he expected that two separate cases before the State Supreme Court and several more cases in lower courts would now go to trial.

Jamie Court, executive director of the Foundation for Taxpayer and Consumer Rights, said the decision would have ramifications beyond California. He said it was “a big victory” over legal claims that H.M.O.’s were not liable in state courts.

About 1.5 million of the four million California Medicare beneficiaries are in health maintenance organizations, including 600,000 in H.M.O.’s of PacifiCare’s Secure Horizons unit.     

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