June 1999 Bulletin

'Care' claims not preempted by Medicare act

A federal judge has sent back to state court the first suit filed under a 1997 Texas law holding HMOs liable for adverse health care decisions. The suit was filed last year on behalf of the family of a Fort Worth man who killed himself by drinking anti-freeze after being released from treatment for depression. The family sued NYLCare and the company that managed its mental health care business alleging that failure to use ordinary care in treating the man caused his death.

NYLCare sought to have the case removed to federal court on the grounds that the plaintiff's claims were preempted by the Medicare Act, which bars recovery claims "arising under" the act.

Plaintiffs argued that they were not making claims for benefits that might have been denied, but were seeking relief based on the defendants' failure to use ordinary care making health care treatment decisions.

In Brief


The Massachusetts Health Care Trust bill, sponsored by more than 60 legislators, would establish a single-payer universal health care delivery system in the state. There would be no deductibles and no copayments under the system, but it would require a 1 percent payroll tax and an average increase of $500 per person in the state income tax. A study commissioned by the Massachusetts Medical Society says the universal health plan would cost $1 billion less a year than current programs, which currently leave 750,000 people in the state uninsured, by reducing insurers' administrative costs and doctors' paperwork, cutting inappropriate hospital care and having the state negotiate prescription prices.

Also in Massachusetts, the House and Senate passed comprehensive patient protection legislation bills, which include provisions for external appeals, prudent layperson, grievance procedures, etc. The Senate version also includes an HMO liability provision. To break the deadlock, the Massachusetts Medical Society worked with the representatives of HMOs in the state to develop some consensus language, which was then presented to the Joint Committee on Health.


The California Senate Health and Human Services Committee approved a bill that would guarantee health care coverage for every state resident by July 1, 2003. The bill moved to the Senate Appropriations Committee for another hearing. The bill does not address who would pay for the coverage or the extent or scope of the proposed coverage which would be studied by experts at the University of California. The results of the study would be used to develop recommendations that would be submitted to the legislature in 2001. The bill is supported by the California Medical Association, labor, teachers and senior citizens.


Maryland Gov. Parris Glendening signed into law a variety of health care-related bills that address patient access to specialist care and prescription drugs, coverage for medical clinical trials and coverage for a prosthesis after a mastectomy. Legislation initially drafted by Glendening called for expanding patients' rights to coverage for specialist care, including out-of-network specialists, and for prescriptions not included in an insurer's formulary.


Vermont's division of health care administration recently filed a rule that sets up an external review process that would allow people to challenge health care insurers' decisions over coverage or selection of a physician. The reviews would be conducted by independent organizations contracted by the state. The rule becomes effective July 1.


A bill proposing that the state pay the doctors' bills of all Connecticut residents moved out of the Labor and Public Employees Committee and sent to the House of Representatives where it was tabled. The plan would allow residents to choose their own doctor because all physicians would be reimbursed by the state. A panel of state-appointed health care experts would have the responsibility of approving treatment plans. The money would come from public funds, which are expected to be enriched with the state's share of the national settlement with tobacco companies.


Legislation that would have made Arizona one of the toughest states in the country for the HMOs died when lawmakers voted to study the issue after the legislature adjourns. Critics said the bill had too many mandates; it contained a provision to require HMOs to provide chiropractic care which was in a previous bill that the Governor vetoed; and it was strongly opposed by the business community which spent $100,000 in direct mail and radio ads.


Florida regulators are auditing the payment records and quality-of-care issues of all 35 health maintenance organizations in the state, The regulators are responding to a "significant" increase in the number of complaints about HMOs from both members and providers. The Florida Hospital Association released a study showing that HMOs and other managed care companiues owe Floirida hospitals $382 million in outstanding claims as of Jan. 1, 1999 with 20 percent of the claims older than 120 days.


Gov. Roy Barnes signed into public law a bill that will allow HMO members to see out-of-network physicians for a higher price. He also signed a bill that will allow HMO members to sue a plan for noncoverage of medical services, but only after an internal and external review process. Gov. Barnes also signed a bill creating the Department of Community Health to represent consumers in all forms of insurance disputes.

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