Reporter-News Archives Sunday, April 27, 1997 Bill would allow patients to sue HMOs By RICHARD HORN Staff Writer Lisa Meador blames her health-maintenance organization for her husband's heart attack. And so does her doctor. "The HMO would not approve a test my doctor recommended," she said, "and the delay caused my husband's heart to weaken greatly. I know it and my doctor knows it, and we're both furious about it." Meador insists she's not "the suing kind" but was shocked to learned that even if she wanted to she could not seek damages from her HMO had her husband died. Under the law, she said, HMOs don't practice medicine and thus aren't liable. "It's crazy," she said. "I'd have to sue my doctor and why would I do that? He wanted to do the test." That's why she hopes the Texas Legislature passes the toughest HMO liability law in the country. The Senate already has approved the bill, bringing Texas a step closer to becoming the first state where consumers could sue an HMO for malpractice. The measure could hit the House floor this week. It's a fierce fight, one that focuses light on the growing pains of America's fast-changing healthcare system. And it's created some incredibly unusual bedfellows. Doctors and trial lawyers - normally mortal legislative enemies - are pitted against HMO leaders and business lobbyists, who contend healthcare costs would increase, trial lawyers would get richer and employers contracting with HMOs would get sucked into the new litigation. In the center of it all is a West Central Texas lawmaker, Republican state Sen. David Sibley, a Waco oral surgeon with a law degree, who authored the proposal and believes HMOs must be held more accountable. Sibley, who two years ago battled trial lawyers to put strict limits on personal injury lawsuits, said last week he'll fight to keep this bill as strong as possible, despite a threatened veto from Gov. George W. Bush. "I believe HMOs are practicing medicine," Sibley said. "They make mistakes and they're not held accountable for those mistakes. They can just walk out of the courthouse." The Texas Medical Association, representing physicians, agrees, believing doctors are the ones left holding the bag for decisions that aren't theirs. But HMOs are fighting hard. Their leaders say new rules providing greater appeals and controls have not had time to work and are not well-known. They also warn Sibley's bill would create real harm while doing nothing to address concerns of either patients or physicians. "Doctors are playing with fire," said Geoff Wurzel, executive director of the Texas HMO Association. "You can't open liability a little bit. Clever attorneys will find all sorts of things to do with this new law." 'Pandora's Box' More and more Texans are enrolling in highly competitive HMOs, which seek to cut costs by, among other steps, emphasizing basic primary care and restricting access to expensive specialist services. Texas law prohibits the practice of corporate medicine, meaning managed care organizations can't be held liable for treatment decisions. Many doctors, however, contend HMOs are essentially telling them how to treat their patients. Sibley's bill is part of a huge package of new HMO regulations, most of which win broad approval from both doctors and HMO lobbyists. The HMO leaders say these regulations are welcome and sufficient. Thus, they say, the most controversial of Sibley's bills - creating HMO liability - is unnecessary. "If we don't make a decision you think is right, you immediately appeal it and there are avenues for doing that," Wurzel said. "We think that is the right public policy way to solve the issue legislators say they're trying to solve." Governor Bush agrees. He fears HMO liability would open a "Pandora's Box" of litigation and he's trying to find common ground. "All the parties involved, including our staff, are currently having discussions about how to protect people without causing a flurry of lawsuits," Bush spokesman Ray Sullivan said Friday. "It's still a work in progress." Bush's preferred solution is creation of independent review organizations to ensure that HMO's act responsibly. Under that proposal, patients who were denied payment for care would appeal to the HMO and if still unsatisfied could appeal to the independent panel. While there's wide acceptance in principle, there's disagreement over the details of the review process. Sibley, normally a Bush ally on many issues, including tort reform, favors independent review. But he insists patients must in the end have the option of going to the courthouse. He denies that's inconsistent talk from a senator who's fought for lawsuit restrictions in the past. "Last session when I led the tort reform movement my whole pitch was, let's make it fair," he said. "We heard a great deal of testimony about HMOs making all sorts of decisions that adversely affect people. Doctors would say this person needs to be in the hospital and the HMO would say no. The patient may die or be horribly maimed, and the HMO would say, well, I guess we were wrong. "I don't know what is so special about this profit-making business," he added. "Every other business that works for profit in Texas is held accountable." The Texas Medical Association supports the liability bill, as does the Taylor County Medical Society. "Denying payment is in essence denying treatment," said Connie Barron, a TMA spokeswoman. "Independent review is fine, but in an emergency situation, what good is independent review?" And she denies Sibley's bill would create a new avenue for lawsuits. Doctors already are being sued in these instances, she said. But if managed care organizations are leading doctors to make certain decisions, they should be held responsible for them. "When I make a mistake, the HMO shouldn't be held accountable for that," said Dr. Dan Boyle, an Austin emergency room physician who testified before a Senate committee. "But they should be accountable if they tie my hands and don't let me take care of patients the way they need to be taken care of, and something goes wrong." 'Deep pockets' State HMO leaders insist the law already allows consumers to sue managed care organizations. They can file breach of contract claims, suits alleging violations of the Deceptive Trade Practices Act, and common law suits alleging corporate negligence. "Lawsuits are being filed," said Wurzel of the Texas HMO Association. "You're crazy to think whatever you do as a corporate entity you're not liable for and can be sued for." By creating even more causes of action, he said, Sibley's bill would cost Texas consumers $183 million a year in higher premiums; health benefit costs would increase 3 to 5 percent, he said. What doctors want, he said, is a "corporate deep pocket" to stand with them if they're sued. But many doctors will end up being hurt worse by the resulting litigation, he said. In Abilene, hospital and HMO officials say they recognize the need for standards but also believe the problems lies elsewhere, with poorly run HMOs. A spokesman for Abilene Regional Medical Center, which is the local provider for HMO Blue (part of Blue Cross/Blue Shield), said both the hospital and its HMO "support legislation aimed at eliminating the harmful practice of denying medically necessary care." "HMO Blue has put much faith and control in the hands of the physicians by allowing them to make referrals to any participating specialist without needing to get HMO Blue's approval," the spokesman said. "Legislation which raises the standards for our industry allows us to play on a more level playing field." Dr. Dell McKnight is an Abilene physician and the medical director for FirstCare, Hendrick Medical Center's HMO. He said FirstCare already practices state guidelines that provide remedies for consumers and avenues for appeal. He testified against Sibley's liability bill in Austin, contending it is unnecessary and would only benefit trial lawyers. The state's remedies, he said, have only been in place since October. It's far too early for lawmakers to assume they aren't adequate and tell Texans to rush to the courthouse. The rules also allow an appeals process for physicians. "The remedies are very good," McKnight said. "They require time frames, expedited appeals, they require HMOs to address these kinds of issues. What I would propose is that we live under those rules and see whether they address the problem." Critics of the bill also point out existing state insurance regulations already led to a $1 million fine against Kaiser Foundation Health Plan, which is also under state orders to improve its patient care. Dangerous precedent One of the strongest critics of Sibley's HMO liability bill isn't even in healthcare. He's H. Dane Harris, president of the Texas Association of Business and Chambers of Commerce. In a speech in Abilene last week, he charged the bill leaves too many loopholes allowing people to also sue employers who contract with HMOs. He calls it dangerous, precedent-setting legislation for business, especially self-funded employers. "The first time that an employer is found to be legally liable, you'll find employers getting out of providing healthcare coverage," Harris said. "Healthcare will become more inaccessible to more people." He favors the independent review option but says doctors and trial attorneys aren't even open to the option, favoring litigation. "It seems to be the perception that if you are unhappy, litigate," he said. Sibley responded: "That's a lie, and I hope you'll quote me." Employers have never been liable under the bill, from the first time it was drafted, he said. Just to be certain, he said, the bill that passed the Senate even included language stating employers are not liable. Jim Perdue, a Houston trial attorney who testified in favor of the bill, said surveys show the liability idea is overwhelmingly popular with the public. A fast-growing segment of the public is involved with HMOs, recognize the power they hold and believe they should have the right to sue. If it doesn't pass, he said, people will see increasing malpractice. "What do you think the attitude of a corporation is going to be if you tell them they are not going to be liable for any decision they make?" he said. "I do not understand the concept that people making decisions daily about other people's lives have immunity." Some provisions: In addition to a bill allowing consumers to sue HMOs, the Texas Senate has also passed a measure placing into state law HMO regulations recently adopted by the Texas Insurance Commission. HMO leaders believe these provisions, also sponsored by state Sen. David Sibley, make it unnecessary for the Texas Legislature to allow consumers to sue HMOs. Among other things, the provisions: -- Place HMO oversight under the Texas Department of Insurance, instead of the Texas Department of Health. -- Provide a standard complaint and appeals procedure concerning HMO decisions. -- Prohibit "gag clauses," meaning doctors must be allowed to fully inform patients of all treatment options without fear of retaliation from the managed care organization. -- Define "emergency care," requiring an HMO to cover emergency room treatment if a "prudent lay person" believes his injury or illness will cause serious injury or or disfigurement if not immediately treated. -- Authorize the insurance commissioner to set standards for waiting times, travel times and physician-patient ratios. -- Prohibit retaliation against physicians and people enrolled in HMOs who file "reasonable complaints." -- Authorize the state insurance commissioner to suspend or revoke certificates of authority for HMOs that fail to correct deficiencies. 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