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Illinois HMO Act Makes Case in DC |
Are HMOs protected from lawsuits when they refuse to cover physician-recommended medical procedures in states with "patients' rights" laws on the books? A lawsuit from Illinois has become the signature case for this battle, finding its way to the United States Supreme Court.
At issue is whether state law (the Illinois HMO Act) conflicts with the federal ERISA preemption that HMOs invoke to refuse authorization for treatments they deem medically unnecessary. HMOs have traditionally hidden behind ERISA, declaring that, as employee benefit plan "facilitators," they are immune to litigation by individual patients.
The protagonists in this legal odyssey are Rush Prudential HMO and Illinois resident Debra Moran, who was insured by Rush through her husband's employee-sponsored benefits program. Debra Moran sought treatment for severe pain, numbness and immobility in her shoulder and arm. While undergoing physical therapy with her primary care physician, she visited an out-of-network specialist who diagnosed her with brachial plexopathy and thoracic outlet syndrome. He recommended costly micronuerolysis surgery, which could only be done by an out-of-network specialist.
Moran resorted to Rush HMO's internal appeals process for approval. Two Rush-affiliated surgeons, however, said the micronuerolysis surgery was not medically necessary, and suggested a less aggressive, in-network procedure. Moran's primary-care physician, however, believed micronuerolysis surgery was medically necessary, and requested that Rush cover the procedure; Rush refused.
After that refusal, Moran submitted a written demand to Rush for compliance with the Illinois HMO Act. Under the Act, HMOs are required to provide for an outside review by an independent physician when the patient's primary care physician and HMO cannot agree on the medical necessity of a treatment by an in-network primary care physician. In response, Rush sought to move Moran's complaint to Federal Court, where ERISA would apply.
Not wanting to delay any longer, Moran maxed out her credit cards and paid for the 14-hour surgery herself. She then handed Rush HMO the $95,000 bill and sued for reimbursement. After the independent reviewer reported that the surgery was indeed necessary, the court ordered Rush to reimburse Moran.
Rush appealed the court's decision, arguing that the state had no right to interfere with benefit plans regulated by federal law. As a benefits plan "facilitator," Rush argued, they were shielded from the Illinois HMO Act by ERISA.
The Appellate Court, however, ruled that laws regarding insurance should fall under the purview of state insurance departments. According to the Court, state laws allowing for appeals of coverage should not be invalidated by ERISA. Rush, therefore, had to comply with the independent review procedure mandated by the Illinois HMO Act.
Rush HMO appealed this decision to the US Supreme Court, which agreed to hear the case in early 2002. A ruling is not expected on this case for several months.
Rush Prudential HMO v. Moran has evolved into a landmark patients' rights case. It's the first patient-filed lawsuit against an HMO that has successfully negotiated the ERISA roadblock.
Currently, forty states have passed laws requiring a binding independent review when a patient's physician and their HMO disagree on medically appropriate care to be rendered.
The Illinois State Medical Society joined with the AMA/State Medical Society Litigation Center in filing a "friend of the court" brief on behalf of Debra Moran, supporting the binding review provision of the Illinois HMO Act.