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State court rules patients can sue their health plans

From the March 1999 ACP-ASIM Observer, copyright © 1999 by the American College of Physicians-American Society of Internal Medicine.

By Michael J. Werner

In a major victory for patients and organized medicine, a state supreme court has ruled that a health plan can be sued for negligence, affirming the College's stance on the issue.

In December, the Pennsylvania Supreme Court ruled that lawsuits against U.S. Healthcare for negligence are not barred by the Employee Retirement Income Security Act (ERISA). Health plans and other insurers have long claimed that ERISA, a federal law designed to regulate pension plans, protects them from such lawsuits.

ACP-ASIM staff helped write an amicus curiae brief on behalf of the AMA, ACP-ASIM and many other medical specialty societies against U.S. Healthcare in the case, Pappas v. Asbel. In the Pappas case, a patient was admitted to an emergency room complaining of paralysis and numbness in his extremities. The emergency room physicians concluded that the patient was suffering from an epidural abscess that was pressing on his spinal column. They agreed that he needed to be referred to another hospital for emergency neurological care.

However, U.S. Healthcare, the patient's HMO, refused to authorize a transfer to the hospital. The physician called U.S. Healthcare to appeal this denial, but by the time arrangements were finally made to move the patient, over four hours had passed since the original diagnosis. The patient now suffers from permanent quadriplegia resulting from compression of his spine by the abscess.

The patient filed a lawsuit against his primary care physician and the hospital where he was first taken, and these actions were settled. Subsequently, the physician and hospital sued U.S. Healthcare for refusing to authorize the transfer to a hospital selected by the emergency room physicians. U.S. Healthcare filed a motion to dismiss the suits, arguing that they were preempted by ERISA.

Courts have typically ruled that the ERISA statute pre-empts all state laws and regulations, including tort claims against health plans. Organizations such as ACP-ASIM have been lobbying Congress to adopt an amendment to ERISA that changes this pre-emption provision.

Courts are beginning to rule that ERISA does not bar lawsuits against a plan. They have recognized that health plans are often making medical decisions and that when those decisions result in a patient injury, health plans should be legally responsible.

The Pappas court followed this trend. The court directly addressed—and rejected—U.S. Healthcare's claim. It said that the purpose of ERISA "was to avoid a multiplicity of regulation in order to permit the nationally uniform administration of employee benefit plans." According to the court, when Congress enacted ERISA, it "did not intend to preempt state laws which govern the provision of safe medical care."

Court rulings such as this one, combined with the possibility of Congressional action, make it less likely that health plans will be able to use ERISA as a defense in the future. As a result, they will be held legally responsible for their decisions.

Michael J. Werner is Counsel for Health Policy in ACP-ASIM's Washington, D.C., office.

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