Reforming HMOs while deforming our beleaguered tort system

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The San Diego Union-Tribune

SOURCE: Court is director of Consumers For Quality Care, a project of the Santa Monica-based Foundation for Taxpayer and Consumer Rights. The World Wide Web address is Court is author of “Making A Killing: HMOs and the threat to your health,” Common Courage Press (fall).

Last week, the HMO industry launched another multimillion-dollar advertising blitz to stop a bipartisan congressional compromise for HMO patients’ rights. The target of the ads is giving “trial lawyers more opportunities to cash in on all kinds of frivolous lawsuits.”

As the legislative clocks on pre-millennium reform tick down in Washington, D.C., where Congress adjourns in October, and Sacramento, where this century’s business ends Sept. 10, the battle for HMO reform is turning into a debate over tort deform, a long-sought agenda item of the insurance industry. This proves that even on the darkest days for Big Insurance, those with cash clout have much to gain.

In California, that gain would be a “substantial harm” threshold that injured patients must meet before being able to sue their HMO. At the ballot box and in the Legislature, Californians have repeatedly rebuffed insurance industry efforts to establish a “no fault” auto insurance system, where only the crippled and permanently disfigured can recover damages for their pain and suffering.

Last week, though, Gov. Gray Davis, who opposed no-fault auto insurance in the past, introduced a similar concept to HMO reform — proposing that the threshold for the right to sue for any damages should be “loss of life, loss of limb, permanent loss of a major body function or severe pain.”

One problem is that such a standard does not now apply to public employees like Davis, who can sue for any harm they sustain or to people who buy their own insurance and beneficiaries of Medicare and Medi-Cal. (These populations are not limited by the federal benefits law that now curbs the right to recover damages for 14 million Californians with private industry coverage) Davis’ proposal will either create a two-tiered system — public officials having more remedies than those they serve — or eviscerate legal rights for public employees, individual purchasers and those on Medicare and Medicaid.

Moreover, Davis’ definition of “substantial harm” leaves too many injured patients out, which is why Californians and their representatives have rejected verbal thresholds on justice in the past. For instance, patients with financial injuries, mental incapacity, severe emotional distress, disfigurement, loss or impairment of a bodily function that is not “permanent” or “major” would have no remedy, unless they work for the state.

Oxnard resident Steven Farren suffered partial loss of vision because of failure to receive treatment for a tumor from his HMO. He cannot drive at night, and his ability to run his landscaping business has been severely impeded. He would have no remedy under the Davis standard because he only lost vision in one eye. Davis should trust state juries to determine what harm is serious enough to deserve a remedy.

Davis’ proposal also seeks to abrogate a current legal standard that allows the injured to recover the cost of their damages from any or all wrongdoers collectively — so that if one goes bankrupt, the other must meet the commitment. This is particularly vital for HMO victims who may be injured by both a doctor-run medical group and the HMO that employs them. Two prominent medical groups — Medpartners and FPA Medical Management — went bankrupt recently, largely because HMOs did not pay them enough to survive. HMOs now claim they are not responsible for doctor bills unpaid by the medical groups. If patients could not recover for their injuries from the HMOs when medical groups they hire fail, patients will bear the burden of HMO-induced wrongs.

In Congress, too, tort reform threatens to overshadow the need for patients’ rights. To win bipartisan support, a proposal by Reps. John Dingel, D-Mich., Charles Norwood, R-Ga., to be debated this fall precludes punitive damages when HMOs abide by external review decisions. HMOs would only be liable for economic damages, loss wages and medical bills, in cases where a patient dies. In California, family members cannot collect for a dead patient’s pain and suffering.

HMOs would actually have an incentive to let patients they have injured die because patients’ claims for their pain and suffering evaporate with them. Elder abuse cases are the only exception to this legal rule because of the same death incentive for nursing homes to kill patients off. HMOs should be another exception.

The civil justice is an instrumentality for people, it should not be limited by the wish lists of special interests. 47 patients victimized by HMOs and without a remedy, including Farren, recently sought a meeting with Davis, who did not even bother to respond to their letter, while meeting with HMO executives behind closed doors. If these patients cannot get an audience with their governor, at least they should have their day in court.


For the record; An Aug. 25 Opinion page article by Jamie Court, ” Reforming HMOs while deforming our beleagured tort system,” stated that, Medpartners, a prominent medical group, recently had gone bankrupt. In fact, a subsidiary of Medpartners at the time, Medpartners Provider Network Inc., was taken over by a conservator in March and was placed in Chapter 11 bankruptcy protection. Since that time, the state of California and Medpartners Inc., reached a tentative settlement agreement. (991018, B-7)

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