Why don't 50 million Americans have the same rights as other patients to hold their health insurer accountable for denials of care?

Insurance companies profit when they delay or deny care to patients, sometimes causing permanent harm or even death. But not all patients are equal when it comes to holding insurers legally accountable for such deeply wrongful behavior.

People who buy health insurance on their own or get it through the government can sue their insurers for damages. 50 million Americans who receive health coverage from an employer in the private sector cannot recover damages against a health insurer — no matter what harm results from a company's failure to approve doctor-requested treatment.

Insurance company employees admit — in private and off the record — that the companies are more likely to delay and deny treatment to workers covered by private employers, because they face no consequences. This health insurance apartheid could be erased with little cost to the medical system.

Real Patients, Real Harm

Due to the lack of legal accountability, HMOs and insurers are largely free to deny access to care without fear of reprisal or financial consequences.

That was the case for Patrick Gannon, whose story was featured by NBC's Dateline on January 24, 2010. Gannon suffered two strokes and cardiac arrest at 42, just as he was about to become a first-time father. Blue Shield of California denied Patrick the timely therapy he needed to have a strong chance at recovery. It even refused to cover a bed and lift that would enable his parents to care properly for him at home.

The injustice of the current system was also dramatized by the story of teen-age Nataline Sarkisyan, who died after CIGNA denied her a potentially life-saving liver transplant. Another patient, Ephram Nehme, was allowed to sue his insurer, Blue Cross, for denying a liver transplant because Ephram had bought his policy on his own, while Nataline's parents could not hold their insurer accountable because Nataline's health insurance was paid for by her dad's employer.

Another tragic story of the lack of equal justice is that of Florence Corcoran.

Corcoran's health insurer, United Healthcare, let a clerk thousands of miles away make a life-threatening decision about my life and my baby's life without even seeing me and overruled five of my doctors, said Florence Corcoran. It is a story that echoes so many tragedies recounted in Consumer Watchdog president Jamie Court's book, Making a Killing.

But as with many of the other stories, there's a twist a second tragedy. They don't get held accountable. And that's what appalls me. I relive that all the time. Insurance companies don't answer to nobody.

Loophole: Health Insurers Get Away With Murder

A 1987 Supreme Court decision in a case called Pilot Life v. Dedeaux, created a legal loophole barring those with private employer-paid health coverage from holding insurers legally accountable for denying medically necessary treatments. The Supreme Court decision in Pilot Life stated that state common law causes of action arising from the improper processing of a claim are preempted. The decision was widely seen as a gross misinterpretation of the law governing employee benefits, but insurance company lobbies have strongly opposed a legislative correction.

Under the Pilot Life decision and the Employee Retirement Income Security Act (ERISA), lawsuits may only be filed in a federal court, and can only recover the cost of the procedure or service denied in the first place no damages or penalties are allowed and no reimbursement for a lost house, job or needless suffering. If the patient dies before receiving the disputed treatment, the family can recover nothing. Insures have an incentive to delay and deny treatment for patients with health coverage from a private employer. If bank robbers only had to give the stolen money back, wouldn't there be more bank robberies?

Fixing the loophole: New federal legislation must overturn Pilot Life and restore the reach of state common law. Then people who are covered with health insurance on the job would have the same remedies as individuals who buy their own insurance or get it through government.

Resources:

Watch a video of a former CIGNA executive, Wendell Potter, describing how his former employer denied Nataline Sarkisyan a potentially life-saving liver transplant.

Watch Wendell Potter on Bill Moyers' Journal discussing the financial incentives on health insurers to deny care and the need for legal liability reform.