Health Insurance Quotes
State patients' rights efforts limited by federal law
Since Texas enacted the first state law explicitly allowing consumers to sue managed care providers, such as health maintenance organizations (HMOs) and health insurance companies, in 1997, Arizona, California, Georgia, Maine, New Jersey, Oklahoma, Washington, and West Virginia have followed suit. But a study by the Kaiser Family Foundation suggests that meaningful change must come from federal reform.
"If a federal patients' bill of rights is passed, people aren't going to be running to court to sue their health insurance provider."
According to the study, the biggest stumbling block to meaningful managed care reform on the state level comes in the form of the federal Employee Retirement Income Security Act (ERISA).
Under ERISA, consumers who want to sue their health insurance providers after being denied treatment can only seek reparations in federal court, and can only be awarded damages equal to the price of the treatment that was denied. Damages for pain and suffering cannot be awarded.
Because ERISA supercedes state laws, state efforts to bring about a patients' bill of rights have been forced to focus on enacting independent review organizations and allowing managed care organizations to be sued for medical malpractice a claim that is much more difficult to prove.
"The nightmare scenario would be if an insurance company denied a woman treatment for a mammogram, and then later she turned out to have breast cancer that the mammogram might have caught in the early stages," says Larry Levitt, a vice president of the Kaiser Family Foundation. "In that case, the woman could sue under ERISA, but she'd only be able to receive the price of the mammogram that was denied."
Under the emerging state laws, that situation is only slightly changed. If she could prove that the managed care company had a corporate practice of denying mammograms, or that it provided financial incentives for doctors to not prescrib the procedure, the woman would only be allowed to sue her insurance company for corporate practice of medicine and for medical malpractice.
"The bar is much higher for these sorts of lawsuits," says Levitt.
According to Levitt, the area in which the states have had the greatest success is in establishing independent review organizations to examine coverage denials in an attempt to remove the need for a patient to sue a managed care organization.
"The states have been successful in using the appeals process to keep cases out of court," says Levitt. "This is suggestive of the fact that if a federal patients' bill of rights is passed, people aren't going to be running to court to sue their health insurance provider."