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When Fighting HMOs, Shoot First
Dan Ackman, 06.22.04, 8:05 AM ET

NEW YORK - Are health maintenance organizations in the business of practicing medicine? No, the Supreme Court says: They are in the business of denying medicine.

Yesterday, the court weighed in on one aspect of so-called patients' rights laws and held that patients could not sue HMOs for the results of their refusal to pay for certain doctor-approved remedies. The best they can do under the federal law that governs such matters is sue under the insurance policy for reimbursement of the cost of the benefits the HMOs denied.

In a unanimous decision written by Justice Clarence Thomas, the court held that coverage-denial suits against HMOs cannot be filed under state malpractice laws but must proceed in federal court under the Employee Retirement Income Security Act of 1974. "We hold that the causes of action are completely pre-empted and hence removable from state to federal court," Thomas wrote.

The decision in Aetna Health v. Davila came in response to two cases first filed in Texas courts. In one, plaintiff said the HMO forced him to take the drug Naprosyn for his arthritis, rather than the Vioxx his doctor prescribed. The patient reacted badly in way that required extensive treatment and hospitalization. The second suit involved a patient who underwent surgery. Although her treating physician recommended an extended hospital stay, a Cigna (nyse: CI - news - people ) discharge nurse determined that she did not meet the plan's criteria for a continued hospital stay. The result, she alleged, was a relapse and a return to the hospital.

Then Governor George Bush signed the patients' rights law. But since coming to Washington, Bush's enthusiasm for the Texas law has waned and the Justice Department sided with the insurance companies, units of Aetna (nyse: AET - news - people ) and Cigna. A federal appeals court said the insurers should be held to the duty of ordinary care that applies to doctors practicing medicine. But the Supreme Court said the only issue was whether the insurer provided the coverage that the policy dictates. Thus the patients were out of court--at least state court. They could still sue on other, less remunerative, grounds in federal court.

The plaintiffs' injuries could not fairly be attributed to their managed-care companies if those companies "correctly concluded that, under the terms of the relevant plan, a particular treatment was not covered," the court said. It was the plan itself, not the actions enforcing it that caused the preferred treatment to be denied.

The ruling potentially affects the scores of millions of people covered by HMOs. Many patients--and even more doctors--complain that these insurers practice medicine in effect by deciding what care the company will reimburse the doctor or hospital for. At least nine other states have laws similar to the Texas statute including California, Georgia, and New Jersey.

The decision seems to be somewhat at odds with another decision by the Supreme Court two years ago. That decision, in a case called Rush Prudential HMO v. Moran, said HMOs could be required by state law to allow for second opinions by independent boards that could overrule the HMO. Neither plaintiff in the case decided yesterday exercised such rights or challenged the refusals before they suffered the consequences.

The lesson for patients is that if you don't like what the HMO offers, fight first. Or find a doctor who will fight the HMO for you. If you wait, and happen to suffer, it could be too late.

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