June 2000 Bulletin

In Brief

Thirty-three state legislatures had some form of insurer liability legislation on their 2000 agenda. Generally, the bills grant the right to sue a health plan if a patient believes harm was done when the health plan has denied a given benefit. Many states have passed some type of patient protection legislation, but only seven states have given patients the right to sue their HMOs–Arizona, Oklahoma, Washington, Maine, Texas, California and Georgia. Few of the states where patient protection proposals are on the table have made much progress. Minnesota’s State Senate passed such a bill early this month. In Tennessee, a right-to-sue bill made it through the House in February and has languished in the Senate since then. Florida’s legislature has several versions of bills allowing patients to sue their HMOs pending, but none of them have advanced very far. Other states have pigeonholed HMO liability proposals entirely. Colorado postponed its bill indefinitely. Virginia adjourned this year without dealing with its bill allowing patient litigation against HMOs. Connecticut’s bill on the subject is dead.


A compromise struck on a Maine "patient’s bill of rights" that would allow customers to sue their managed-care health insurers saved the legislation from a probable veto. Lawmakers and Gov. Angus King crafted new language that would permit a patient who feels harmed by an insurer’s decision to sue for up to $400,000 in non-economic damages, but would limit opportunities for cases to reach court. Supporters say the bill is not as strong as the original version, but would still protect the enrollees of managed-care insurance plans from the consequences of medical decisions made by companies solely on the basis of cost. King backed off his earlier demand for a $150,000 cap on suits in exchange for other limits. The compromise bill would keep the three-year statute of limitations, but the period would begin after a patient loses his first appeal, instead of the final appeal in the original bill.


Aetna, Inc. said it plans to relax some of the managed care policies in Connecticut where it has 311,00 members and 5,600 doctors. Aetna also plans to make changes in other markets. In April, Aetna signed a settlement of a suit in Texas, changing the way it does business with doctors and consumers in that state. The changes in Connecticut include the elimination of capitation agreements for primary care physicians and relaxing its mandatory "all products" requirement that obligates doctors to participate in all of the insurer’s plans. Aetna will allow specialists to act as primary care physicians for very sick patients and will allow members and doctors to appeal decisions on coverage in areas such as emergency care, experimental treatments and referrals to specialists


A bill allowing patients to sue their HMO was approved by a Florida state Senate committee, while a state House committee approved another HMO reform bill that does not include the right to sue. The Senate bill would allow someone to sue if they suffer because their HMO denied coverage of a procedure, but only if one of the plan’s doctors believes the procedure was medically necessary. It also gives HMOs 60 days after being sued to resolve the problem. The legislation doesn’t allow punitive damages unless the act is part of an ongoing pattern, is malicious or reckless.

New Jersey

Gov. Christie Whitman signed legislation giving doctors and hospitals $100 million to cover debts left after the failure of HIP Health Plan of New Jersey and American Preferred Provider Plan. Gov. Whitman said doctors and hospitals "stepped up to the plate" and continued to provide care to patients even though they weren’t getting paid. "It’s not fair to ask doctors and hospitals to shoulder the blame alone," she said.

New Mexico

New Mexico has joined a Minnesota lawsuit charging that the federal government shortchanges some states with low Medicare reimbursement rates. The New Mexico Attorney General, who filed the amicus curiae (friend of the court) brief, said "the lack of uniformity of the federal Medical program puts New Mexicans in an unacceptable situation–we rank 46th out of 51 in reimbursement rates to Medicare HMOs, yet we pay the 29th highest premium out-of-pocket costs in the nation."


Arizona Gov. Jane Hull signed legislation in mid-April giving HMO members a more independent review process for their claims disputes with their health plans. It’s a companion to major health care reform legislation that Gov. Hull earlier allowed to become law without her signature. That bill allows patients to sue their managed care organizations. The bill in April gives oversight to the Insurance Department which will choose independent agents to review decisions. Payment for the external reviewers’ services will come from a fund created by an assessment of the insurers. The law accelerates expedited appeals.

New York

The Greater New York Hospital Association and the 1199/Service Employees International Union, which formed a powerful coalition to successfully lobbied for the Health Care Reform Act of 2000, are now pushing a package of bills, including one that would hold health plans legally responsible for the wrongful denial or delay of care or payment for care which they were contractually or legally obligated to provide or cover. Other bills would strengthen the state’s prompt payment law, create a health insurance guarantee fund to protect providers and consumers in the event a health plan becomes insolvent and allow patients to continue an established relationship with their health care providers for one year after a change in their health plans.


Gov. Tommy Thompson signed legislation setting up an independent review process to hear appeals of people denied certain medical care by their health insurers. The bill applies to all health insurers, not just managed care organization. Independent review organizations will include specialists in every medical field. The panels will be certified by the state Commissioner of Insurance.

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