Aetna,
Cigna Win at U.S. High Court on Patient Suits (Update6)
June 21 (Bloomberg) -- Patients can't sue health-maintenance
organizations for refusing to pay for doctor-recommended treatments, the
U.S. Supreme Court ruled, shielding Aetna Inc., Cigna Corp. and other insurers
from the prospect of multimillion- dollar damage awards.
The justices voted 9-0 to block two Texas lawsuits, one that
faulted Aetna for refusing to pay for a painkiller and one that said Cigna
rushed a hysterectomy patient home from the hospital. The court said those
suits are barred under a U.S. law that limits the liability of employer-sponsored
benefit plans.
The ruling, which insulates insurers from damage claims by
the 72 million Americans covered by HMO networks, comes four years after
the court barred a different legal theory invoked by patients. Patients-rights
advocates now will have to turn to Congress, where legislation to authorize
suits has stalled.
``A regulatory vacuum exists,'' Justice Ruth Bader Ginsburg
wrote, in a concurring opinion. She said that, while she agreed with the
ruling, ``I also join the rising judicial chorus urging that Congress and
this court revisit what is an unjust and increasingly tangled'' legal system
for health-care claims.
The decision may thrust the issue into the presidential campaign.
Democratic Senator John Kerry voted for legislation in 2001 that would have
given patients a broad right to take their health insurers to court.
Republican President George W. Bush opposed that measure,
saying it would have driven up health-care costs, and supported a scaled-back
version. The legislative effort stalled when talks broke down between Senate
Democrats and the White House.
Internal Bleeding
In a court filing, the Bush administration urged the Supreme
Court to bar the Texas lawsuits.
``The president's opposition may have played a key role in
today's decision,'' said Ron Pollack, executive director of Families USA,
which filed a brief urging the high court to permit patient lawsuits.
In one of the disputes before the court, Aetna was sued by
Juan Davila, who said he suffered internal bleeding and permanent harm after
the HMO insisted he try a less-expensive pain medicine than Vioxx, which
his doctor had prescribed.
In the other case, Cigna sought to end a lawsuit by Ruby Calad,
who said she was sent home from the hospital too soon after her hysterectomy
and later had to go to the emergency room. Calad said a Cigna representative
overruled her doctor's recommendation that she needed to spend more than
two days in the hospital.
Aetna and Cigna argued that damage suits are barred by a 1974
federal law governing employee benefit programs, the Employee Retirement
Income Security Act, or ERISA. The companies said that under ERISA patients,
using an administrative procedure, can seek payment from insurers only for
the benefits they were denied, not for any pain and suffering they endured
as a result.
`Eligibility Decisions'
The patients said their suits were akin to traditional state-
court malpractice complaints against doctors, which the high court previously
said are permissible under ERISA.
Justice Clarence Thomas, writing the opinion for the court,
agreed with the insurers.
Thomas said the HMOs were making ``pure eligibility decisions''
and weren't acting as treating physicians. He also said the patients ``could
have paid for the treatment themselves and then sought reimbursement.''
Aetna said in a statement that the ruling reaffirms that ERISA
lays out the exclusive means for patients to resolve disputes with their
insurers. ERISA ``has helped employers provide consistent, affordable health
benefits to their employees,'' Aetna said.
Calad and Davila's attorney, George Parker Young, said the
decision ``provides the HMOs with another tool to be used against the millions
of workers and their families covered by ERISA.''
HMOs aim to control costs by requiring patients to go to certain
doctors and get a referral before receiving care from a specialist.
Texas Law
Aetna and Cigna are the third- and fourth-largest U.S. health
insurers respectively, behind No. 1 UnitedHealth Group Inc. and No. 2 WellPoint
Health Networks Inc. Aetna shares fell 96 cents to $84.69 at 2:33 p.m. in
New York Stock Exchange trading. Cigna fell $1.79 to $67.36.
Both lawsuits invoked a Texas law that authorized lawsuits
when HMOs failed to provide ``ordinary care.'' As governor of Texas, Bush
voiced objections to the measure but chose not to veto it, instead letting
it become law without his signature.
About 40 to 50 suits have been filed against the managed-care
networks in Texas in the past seven years, according to a lawyer for the
patients. One jury awarded $13 million, although that amount was reduced
on appeal.
Texas is one of 10 states with HMO liability laws. In other
states, patients have sued HMOs under judge-made ``common law.''
Focus on Congress
``This will jump-start interest in the issue,'' said Sally
Greenberg, senior counsel for Consumers Union, which supported the Texas
law. ``There's been a consensus that care has been wrongfully denied by HMOs
and that patients ought to have some recourse. This is a wake-up call for
Congress now.''
Representative Charles Norwood, a Georgia Republican who has
a been a leading advocate for a patient-rights bill, vowed to redouble his
efforts. He called the ruling ``a blow to patients' rights.''
Health insurers and employer trade groups have fought to limit
patient-rights legislation in Congress. Many of those groups hailed today's
decision.
``It is critical employers feel confident that ordinary benefits
decisions will not subject them to the extreme costs associated with often
unlimited remedies under many state laws,'' said James A. Klein, president
of the American Benefits Council, which represents corporations on pension
issues.
The cases are Aetna Health v. Davila, 02-1845, and Cigna HealthCare
of Texas v. Calad, 03-83.
To contact the reporter on this story:
Greg Stohr in Washington at gstohr@bloomberg.net.
To contact the editor responsible for this story:
Glenn Hall at ghall@bloomberg.net.
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