HMOs’ Protection From Liability Chipped Away, Ruling by Ruling

A federal court in New Orleans has ruled that members may take their HMOs to state court if they are unhappy with their care. The decision, however, does not allow patients to sue over denials of coverage.A three-judge panel on the Fifth Circuit Court of Appeals said that Texas resident Bridgett Giles could sue NYLCare Health Plans in state court. Giles’s son died after a physician failed to diagnose a heart condition. Aetna, NYLCare’s parent, will appeal.

The court did not address its previous liability rulings, which prevent patients from seeking damages in coverage disputes — an area the court has said is off limits per the Employee Retirement Income Security Act. But the new judgment means that in Mississippi, Louisiana, and Texas, where Fifth Circuit rulings are law, patients can sue HMOs in state courts about care — an area traditionally governed by state-level regulation.

The ruling sets the stage for the HMO industry’s appeal of Texas’s unique right-to-sue law, which will be heard in the same federal court.

Meanwhile, a California judge has upheld a $120 million jury award against Aetna U.S. Healthcare in the David Goodrich case. San Bernardino Superior Court Judge Christopher Warner wrote that although he thought the damage award was “high,” it was not “excessive.”

And in an interesting twist in the liability tussle, the Illinois Academy of Family Physicians opposes a series of bills in the state legislature that would grant patient protections, including the right to sue HMOs. The bills are supported by the Illinois State Medical Society. IAFP thinks the bills would add bureaucracy and costs to health care.

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