A
PATIENT'S BILL OF RIGHTS
by Dr.
Martin L. Bell
The tragic events of
9/11 have diverted attention from the public debate in Washington
about a national patients' bill of rights. The idea behind such
legislation is that patients should have the right to sue their HMO or
managed care insurer for money damages if their coverage is wrongfully
denied, treatment is delayed or withheld, and their health is
seriously damaged as a result. This kind of legislation is generally
supported by patients, trial lawyers, and consumer advocates. It is
opposed by advocates of tort reform, big business, and the insurance
industry. Last fall, buoyed by a popular consensus that a national
patient's bill of rights was long overdue, conflicting House and
Senate versions were going to a conference committee for resolution
and submission to the President. Then came 9/11, and terrorism issues
eclipsed health care from the legislative agenda. In the aftermath,
partisan bickering began anew, and special interests enjoy another
opportunity to forestall enactment indefinitely.
In the meantime, a few
state legislatures have created their own Patients' Bill of Rights,
and Arizona is one of them. Our law, enacted 2 years ago, can be found
in the Arizona Revised Statutes, Title 20, number 3153. Although it is
the right idea, giving a covered person the right to sue an insurer in
state court, the injured party must prove that the insurer acted
unreasonably and intentionally to delay or deny a service that was
medically necessary. This is a greater burden of proof than an injured
party has in an ordinary negligence case, such as medical malpractice,
where it is not necessary to prove that the party causing the harm
acted intentionally. Negligence means acting carelessly, or failing to
satisfy a reasonable "standard of care" to keep from injuring others.
It does not matter whether the negligent party intended to cause the
injury or not. Under the Arizona law, the health care insurer must
know that it is acting unreasonably. The conduct cannot be
inadvertent, it must be deliberate.
Not surprisingly then,
only the worst cases of abuse by an HMO or health insurance company
could be brought under the Arizona Patients' Bill of Rights. Other
legal theories, called causes of action, may be better suited in many
cases. The most conventional cause of action against an insurance
company is called bad faith. Any type of insurance claim, including a
health insurance claim, that is wrongfully denied by the company is
bad faith. That is because an insurance policy is a contract between
the policyholder and the company. The law of contracts imposes a duty
on the insurance company to act in good faith, which means they must
act fairly and reasonably, and not put their own financial interests
above the interests of those they insure. Bad faith claims may also
include charges of fraud, false advertising, corporate liability, and
breach of fiduciary duty.
The trouble with bad faith claims against health insurance companies
is that they may fall under a Federal law called ERISA. This stands
for the Employee Retirement Income Security Act, a mammoth piece of
federal legislation enacted in 1974 to guarantee the well being and
security of private sector employee benefit plans. ERISA thus impacts
on health care plans which are offered by private employers as
benefits to their employees, and this is how most people get their
health insurance coverage. Until recently, ERISA has provided a nearly
impenetrable shield for managed care organizations against liability
for bad decisions about benefits which result in bad outcomes for
patients. That is because ERISA has been found to pre-empt, or
supercede any state law which might allow such an action. The
practical effect of this pre-emption is to remove a lawsuit brought in
state court to federal court where relief is limited to the recovery
of benefits due, enforcement of rights under the plan, or
clarification of future benefits. Any fines which may be levied are
payable to the government, and complaining parties may or may not be
awarded their attorney's fees. There is no remedy to compensate for
such losses as physical injury, pain and suffering, emotional
distress, lost wages, or disability. The cost of pursuing the remedies
under ERISA may be greater than the relief which is available.
Courts have ruled
differently, and sometimes inconsistently, on ERISA pre-emption. The
outcome depends greatly on the unique facts and circumstances of each
individual case. As a general rule, if the issues in the case have to
do with the quality of the care, which are medical issues, rather than
the quantity of care, which are commercial or business issues, it is
less likely that ERISA will apply. At the present time, most claims
which only allege bad faith are found to be pre-empted by ERISA, with
a very limited recovery at best. That was one of the main reasons that
the Arizona legislature decided to enact its patients' bill of rights.
When and if Congress passes a national patients' bill of rights, it
may pre-empt the Arizona law, and make it easier to prevail against an
HMO or managed care organization than it would be under the present
state law.
There is, however,
another legal theory under which HMO's and managed care organizations
may be held accountable for bad decisions which damage their patients'
health. That is to make them liable for ordinary medical malpractice,
just as doctors and hospitals are now. Such a claim would remain in
the state court system, where ERISA does not apply, and there are no
limits on recovering for all kinds of damages. The theory is that
managed care presents patients with a package, limiting their choices
about doctors and hospitals, location of ancillary services, primary
or specialty care, and even the very necessity of treatment itself.
They compete for business, often marketing and advertising better
services and lower costs. This makes them vicariously liable for their
provider's mistakes, in much the same way employers are liable for the
mistakes of their employees. In many cases, decisions about coverage
are made by licensed physicians working for the company as medical
directors. Such physicians may be liable for negligent decisions, just
as any doctor would be, but the company employing the director is
liable as well.
In other cases, the
company may be liable under a legal theory called ostensible agency.
This theory applies when it reasonably appears to the public that the
company, doctors, and hospitals are all working together as a single
unit. Managed care policies and procedures limit patients' choices of
doctors and hospitals to those they select and contract with. work for
employers. They credential their doctors just as a hospital would, and
they set standards of care for the hospitals they use as well. The
providers are said to be acting as "agents" of the insurance company,
and the company is regarded as the "principal". Under agency theory,
the doctors and hospitals are said to be working for the principal in
much the same way that employees work for employers. The company
vouches for the competence of its providers, and is liable like an
employer for their mistakes. For obvious reasons, claims like this are
usually brought as part of ordinary medical malpractice claims against
doctors and hospitals. Arizona courts ha ve applied this kind of
reasoning in several cases over the last decade.
Managed healthcare is
here to stay. The need to control the ever increasing cost of
healthcare in this country makes certain that decisions about benefits
will continue to be made with the bottom line in mind. Sometimes these
decisions will be wrong, and patients' health will suffer as a result.
When that happens, HMO's and insurance companies must be held
accountable, just as anyone in a position of power and authority would
be, for negligent injury to others who depend on them. In the past,
patients had little or no recourse for such injuries. Whether by
relying on a patients' bill of rights, or on other more conventional
remedies, the scales of justice will be better balanced in favor of
patients one day soon.
Dr.
Martin Bell is a
physician-attorney, licensed to practice both Medicine
and Law in Arizona and Louisiana. As a physician he
practices Plastic and Reconstructive Surgery with an
emphasis on cosmetic surgery procedures. As an attorney,
Dr. Bell represents clients and assists other attorneys
in cases involving medical issues, and he serves as an
expert witness for both defendants and plaintiffs.
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