June 21, 2002


Supreme Court: Patient has right to challenge HMO
By Julie Rovner

Washington (Reuters Health) — The U.S. Supreme Court Thursday re-
ignited a Capitol Hill debate over the rights patients should have to
appeal decisions made by their health insurance plans.

In a 5-4 ruling, the court said an Illinois law that gives patients
in health maintenance organizations the right to seek an outside
physician's opinion if care is denied does not conflict with a
federal law that regulates employee benefits.


The case involved an Illinois speech therapist, Debra Moran, whose
HMO denied her doctor's request for a rare surgery to correct a nerve
problem in her shoulder. Moran — who paid for the surgery herself as
the case dragged on — won the appeal she demanded under the state's
law, but the HMO continued to refuse to pay the $95,000 bill.

It insisted that it was not subject to the Illinois law because the
federal Employee Retirement Income Security Act (ERISA) does not
permit states to legislate employee benefits matters for plans it
covers.
The court disagreed, finding that the Illinois law does not violate
ERISA.

"We recognize, of course, that a state might enact an independent
review requirement with procedures so elaborate, and burdens so
onerous, that they might undermine (ERISA)," said the majority
opinion, written by Justice David Souter. But in this case, he
continued, "no such system is before us."

Backers and opponents of a patients' bill of rights in Congress were
closely watching the court for its decision in the case, Rush
Prudential HMO v. Moran. Had the decision gone the other way, it
could have effectively invalidated not just the "external appeals"
law in Illinois, but those in more than 40 other states.

But several members of Congress said the decision could still prompt
Congress to act.

"I think the prospects of a statute being enacted are higher because
of this decision," said Rep. Rob Andrews (D-NJ). "Groups concerned
about patients' rights will find this inadequate, but industry will
find it frightening because now they're exposed to a patchwork of
state laws," Andrews said.

Rep. Charlie Norwood (R-GA) called the decision "a stunning defeat
for the HMO industry," and predicted it might bring insurers to the
table to discuss a patients' rights bill. "For years and years,
insurers have screamed 'no' to everything, but now look what it has
gotten them. The president needs to step in and cut a deal on the
Patients' Bill of Rights to save insurers from themselves," he said.

But business groups — while expressing dismay that the decision
effectively undercuts ERISA's promise of a single national standard
for benefit plans — said they remain adamantly opposed to a patients'
rights bill.

"If the proponents of an expansive 'patients' bill of rights' think
that today's decision will induce employers to seek enactment of a
federal patients' rights bill, they are sorely mistaken," said James
Klein, President of the American Benefits Council. While the lack of
uniformity is a problem, he said, "the answer to that problem is not
to plunge our healthcare system into a sea of litigation as the
(patients' rights) advocates would like."

Copyright © 2002 Reuters Limited.