June 2000 Bulletin


Court rules HMOs can be sued for overloading doctors

The Illinois Supreme Court has ruled that HMOs can be held liable for direct corporate negligence for assigning too many patients to their physicians. The court ruled that a physician’s failure to see a baby with a fever who was later diagnosed with bacterial meningitis resulted from an inability to serve an overloaded patient population. The physician, Robert A. Jordan, MD, had more than 6,000 patients—4,527 from Chicago HMO Ltd., of Illinois, the HMO involved in the case; 1,500 from another HMO; and he maintained a private practice. The decision means the mother can sue the HMO for negligently assigning too many patients to the baby’s primary care physician. The state Supreme Court used as a precedent other court rulings that hospitals can be sued for institutional negligence. In September, the Illinois Supreme Court ruled that HMOs can be held vicariously liable for the medical malpractice of their independent-contractor physicians because the HMO held the doctors out as its employees and because the HMO exercised some degree over the doctors’ medical judgment.

Texas physician negotiating rules effective in June

Final rules for the implementation of a Texas law allowing independent physicians to collectively negotiate with insurers on fees and patient care issues go into effect June 6. The Texas law, first in the nation, went into effect Sept. 1, but implementation was held up to formalize the rules. The state attorney general, who has oversight jurisdiction over the negotiations, says the rules are designed to streamline paperwork for physicians without leaving them vulnerable to lawsuits under federal antitrust laws. The Texas Medical Association balked at the initial draft of the rules saying they were too complex and would dissuade physicians from participating. The association said the final rules significantly reduced the requirements for fee-related and non-fee-related negotiations. The Texas Association of Health Plans says regardless of the regulations, the Texas law itself violates federal antitrust law and precedent and that some Texas health plans will refuse to participate in negotiations for that reason.

OIG may step up enforcement of anti-kickback law

Physicians should be on the lookout for increased enforcement of the anti-kickback statute, said Kevin McAnaney, chief of industry guidance at the Department of Health and Human Services Office of Inspector General. He warned that OIG lawyers may bring more cases to administrative law judges rather than through the court system. Administrative law judges can impose civil monetary penalties of up to $50,000 per violation and exclude physicians and other health care professions from federal health care programs. Pursuing cases through administrative hearing will lower the burden of proof and enable would-be whistleblowers to recover money from difficult kickback cases.

Paul Perry MD wins Ind. primary to run for U.S. House seat

Paul Perry, MD, an Evansville, Ind. orthopaedic surgeon, surprised the political pundits in the state’s primary election last month when he handily won the nomination to be the Democratic candidate for a seat in the U.S. House of Representatives. Dr. Perry said his victory demonstrated the power of his message about the need for health care reform and the need to send someone who knew about the issues—a physician—to Congress. During the campaign, Dr. Perry stressed the need for a strong patients’ bill of rights; the need for medical decisions to be made by individuals and their doctors, not insurers; and the need for a financially sound Medicare system "for the long haul." Dr. Perry, a hand surgeon, will oppose Rep. John N. Hostettler, the Republican incumbent now in his third term. His slogan: "Let’s Put a Doctor in the House."

Senate committee boosts NIH budget by $2.7 billion

The Senate Appropriations Committee approved a budget increase of $2.7 billion for the National Institutes of Health budget in fiscal 2001. That would put the budget at $20.5 billion. The increase is the largest for any single line item in the largest of the 13 appropriations bills that fund the federal government. In addition to medical research, the bill provides new initiatives to address medical errors, including a $50 million increase for the Agency for Healthcare Quality and Research. The budget for the Centers for Disease Control and Prevention would rise to $3.2 billion, an increase of $168 million. The House Appropriations Committee was scheduled to vote on its version of the bill at press time for the Bulletin.

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