House of Representatives’ Malpractice Bill Preempts HMO Liability Laws In California & 10 Other States

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Also Prevents Juries From Being Informed Of Limits on Victims’ Recovery

Congressional legislation which is supposed to limit medical malpractice victims’ recovery will also preempt state laws allowing patients the right to sue their HMOs, according to the Santa Monica-based Foundation for Taxpayer and Consumer Rights (FTCR), which sponsored California’s HMO accountability law.

Such laws have been in effect in California and ten other states since 1997 — including Texas, Georgia, Washington, Arizona, Maine, Oklahoma, West Virginia, Oregon, New Jersey and North Carolina.

H.R. 5, which will be voted on Wednesday in the House of Representatives, limits patients’ recovery to $250,000 for their pain and suffering and restricts punitive damages to $250,000 or twice one’s economic recovery in all “health care lawsuits” and “health care liability actions.” Such cases are broadly defined to include those brought against HMOs for denials of care and even lawsuits against medical suppliers for defective products, such as exploding heart valves.

While Washington D.C. failed to act to protect HMO patients, over 40 states passed independent medical review laws and 11 states allowed HMO patients the right to sue HMOs that wrongfully deny doctor-recommended care.

California passed such a law in 1999 which gave patients the right to sue an HMO or managed care entity for unlimited damages if the company deny doctor-recommended care, the patient used the medical review process when able, and if a significant harm resulted. The law has been used sparingly but has had a huge deterrent effect. California’s HMO regulator reported HMOs have been far more reasonable with patient requests since they fear being sued.

“This bill makes no distinction between the slip of a physician’s scalpel and a financial decision by an HMO to deny doctor-recommended care in order to save money,” said Jamie Court, FTCR executive director and author of Making A Killing: HMOs and The Threat To Your Health. “This legislation will erase the hard earned victories of the HMO patients’ rights movement and override carefully crafted HMO accountability laws that give billion dollar corporations something to fear. This is not about physicians, it’s about the GOP paying back campaign contributors — such as HMOs, medical product manufacturers, and hospital chains like Tenet — with limited liability.”

In addition, HR 5 explicitly prevents juries from being told about the cap on damages.

“When juries are not told of limits on recovery, they cannot make fair and just decisions,” noted Court.

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Consumer Watchdog
Consumer Watchdog
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