The selection of U.S. Senator John Edwards (D-NC) as Vice Presidential candidate means that HMO patients’ rights will return as a top national issue, according to the Foundation for Taxpayer and Consumer Rights (FTCR).

Two Bush Administration-supported rulings by the U.S. Supreme Court last month took away the rights of Americans working for private employers to sue their HMOs for damages. President Bush urged the Court to rule against HMO accountability, despite campaign promises to support the same Texas “right to sue your HMO” law that the Supreme Court struck down.

According to the ruling, the federal Employee Retirement Income Security Act of 1974 or ERISA — which applies to 140 million private sector employees — supercedes laws in 11 states holding HMOs and insurers legally accountable. A little know fact is that the justices who issued the ruling, the president who lobbied for it, and members of Congress who have refused to pass a federal patients’ bill of rights are not subject to ERISA and thereby retain the right to sue their HMO for damages caused by the denial of physician recommended care.

The court decision might have been forgotten but for the selection of Senator Edwards as Senator Kerry’s (D-MA) running mate. Senator Edwards authored Patients’ Bill of Rights legislation in 2001 along with Senator John McCain (R-AR) and Senator Edward Kennedy (D-MA) which would have allowed patients to hold their HMOs accountable when they are harmed. The legislation — which passed the U.S. Senate but failed to pass the House — is now likely to become a major point of contention in the presidential campaign.

“With Senator Edwards in the race for the White House, the public debate will highlight the candidates’ stark difference of opinion on patients’ HMO rights,” said Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights (FTCR). “Edwards is likely to point out that most Americans have far fewer legal rights than members of Congress or President Bush.”

As a result of the Supreme Court’s decision, patients who receive insurance from a private employer must sue in federal court. Under current law, an HMO found guilty in federal courts must only pay the price of the original treatment. However, the Supreme Court’s ruling does not apply to government officials, church workers or those enrolled in public assistance programs who can sue HMOs under more protective state laws which allow patients to recover damages caused by treatment denials.

“This Bush Administration-supported ruling removes the legal deterrent to HMOs that cut costs and boost profits by denying medical care,” said Jerry Flanagan. “It is the threat of legal liability for the harm they cause to patients that ensures that HMOs provide the care we need when we need it.”

The 2001 Edwards-McCain-Kennedy legislation would allow patients to sue for damages when they are harmed by an HMO’s denial of physician recommended care and establish a floor of rights that states can exceed. The Patients Bill of Rights legislation would provide other protections including the right to see medical specialists like pediatricians, obstetricians and gynecologists.

President Bush‘s support of the HMOs’ case violates promises he made while campaigning for the presidency to protect state patient rights laws, including a 1997 law that took effect while he was a Governor of Texas. The issue of suing HMOs was featured in the third debate between Vice President Gore and then-Governor Bush on Oct. 17, 2000. When Gore said that he, unlike Bush, supported a national patient’s bill of rights and allowing patients to sue HMOs, Bush objected:

“It’s not true. I do support a national patient’s bill of rights,” he said. “As a matter of fact, I brought Republicans and Democrats together to do just that in the state of Texas to get a patient’s bill of rights through. We’re one of the first states that said you can sue an HMO for denying you proper coverage.” Bush added that he did not want a federal law to “supersede good law like we’ve got in Texas.”

Since the Texas law went into effect, 10 other states (California, Georgia, Washington, Arizona, Maine, Oklahoma, West Virginia, New Jersey, North Carolina, and Oregon) have passed similar legislation allowing patients the “right to sue” when they are harmed by a health insurer.

According to federal filings, President Bush and Vice President Cheney have received $2.7 million from insurers since 2002, while Senator Kerry and Senator Edwards have received a combined total of $525,000. Among President Bush‘s campaign Pioneers (bundlers of $100,000 or more in contributions) are seven former or current HMO executives, including UnitedHealth Group CEO William McGuire.

Case Study: Ethan Bedrick – Raleigh, NC

Ethan Bedrick was born January 28, 1992. His delivery had complications and he was asphyxiated. As a result, he suffers from severe cerebral palsy and spastic quadriplegia. Hypertonia from the quadriplegia impairs the motor functions in all four of his limbs.

The terrible thing about hypertonia is that without proper treatment it can get much worse. The hypertonic muscles must be stretched regularly, to avoid shortening and inflexibility. Therefore, Ethan was put on an intense regimen of physical, occupational and speech therapy to help him throughout his development.

When he was 14 months old, Ethan’s HMO unexpectedly cut off coverage of his speech therapy, and limited his physical and occupational therapy to only 15 sessions per year. This sudden change was at the recommendation of an HMO doctor who performed a “utilization review” of Ethan’s case. The HMO has a doctor perform a “utilization review” to look for places to cut off or reduce unnecessary services, and thereby reduce the cost to the HMO. The reviewing HMO doctor called Ethan’s pediatrician who told her that Ethan had a 50% chance to be able to walk by the age of 5. The reviewing HMO doctor decided this prognosis was a “minimal benefit” of further therapy, and so Ethan’s coverage was cut. The HMO doctor never even met personally with Ethan, his family, or his regular doctors during the review.

The denied coverage was finally reviewed a second time in October of 1993. This time, the HMO affirmed its position with a second HMO doctor. Though several months had passed since the initial review, the new HMO doctor did not update Ethan’s file or contact any of his physicians. Instead, he relied only on his general knowledge and a single New England Journal of Medicine article on physical therapy and child development. The article was published in 1988, four years before Ethan was even born!

In addition, the second HMO doctor further denied Ethan prescribed therapeutic equipment, including a bath chair and an upright walker. It was claimed that they were merely “convenience items,” not to be covered by the HMO.

In 1994, exhausted of options, the Bedricks filed suit in state court against the HMO. The HMO had the suit removed to federal court where they would be shielded by the federal ERISA law.

The Federal Circuit Court concluded in 1996, that the HMO’s decision to restrict Ethan’s therapy was “arbitrary and capricious,” as their doctors’ opinions were groundless and riddled with conflict. The court also ruled that the HMO’s guidelines do not require “significant progress” as a precondition to providing medically necessary treatments.

However, because the lawsuit was preempted by ERISA, the Bedricks are left with no means for restitution for Ethan’s therapy loss, and face the future with only limited care and equipment for him. Over the period of reviews and litigation, Ethan lost three critical years of therapy that will cost him for life.

“Until federal law is changed, HMOs will continue to be unaccountable for their cost-cutting techniques that have hurt patients like Ethan,” said Jerry Flanagan.

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The Foundation for Taxpayer and Consumer Rights is a non-profit and non-partisan consumer advocacy organization. For more information, visit us on the web at http://www.consumerwatchdog.org