"Petra Albert sued Kaiser Foundation Hospitals, Southern California Permanente Medical Group, Inc. and Kaiser Foundation Health Plan, Inc. for disability discrimination, failure to engage in interactive process, retaliation, failure to prevent discrimination or retaliation, wrongful termination, failure to provide meal periods, failure to provide rest periods, waiting time penalties and failure to provide accurate wage statements." Filed October 18, 2013 by Aegis Lawfirm in Irvine, California - http://www.aegislawfirm.com/
Article at:  http://www.courthousenews.com/2013/10/29/62427.htm
Legal Filing may be read here: http://www.courthousenews.com/2013/10/29/albert%20breast%20cancer%20discr%20nightmare.pdf

http://www.infozine.com/news/stories/op/storiesView/sid/56982/

EEOC Sues Kaiser Permanente for Disability Discrimination

Friday, September 06, 2013

EEOC Charges that worker with hydrocephalus was fired after being denied a free job coach to assist with training.

San Diego, CA - infoZine - The U.S. Equal Employment Opportunity Commission (EEOC) announced it has filed a disability discrimination lawsuit against Kaiser Permanente, the largest managed care organization in the United States, on behalf of a former food service worker with a disability.

Kaiser Permanente will pay $1.8 million to the family of a man who suffered a brain aneurysm after his headache was wrongly attributed to grief.

In 2005, 45-year-old Ted Blackwell visited a Kaiser clinic in Orange County with a headache and neck pain. According to the binding arbitration document, doctors attributed his symptoms to grief over the death of his brother eight days earlier.

He received an injection and was sent home.

Blackwell returned to the clinic two days later, still in pain. According to the document, his daughter requested a CT scan because of her father's disorientation but doctors decided that wasn't necessary.

Two days later, Blackwell collapsed and underwent surgery at Hoag Hospital for bleeding in his brain. He suffered permanent brain damage and is unable to work, according to his attorney James McElroy of Del Mar.

http://www.ocregister.com/life/blackwell-pain-brain-1937851-kaiser-days#

mirrored for historical purposes at: https://kaiserpapers.com/legalstuff/tedblackwell.html

CASE #: INC067929 TIME: 8:30
 CATEGORY: Medical Malpractice
 CASE NAME: ALARIO VS PHAM
 HEARING: Hearing on OSC re why unserved parties should not be dismis
 on Complaint of ALARIO.


 PARTIES: FIRMS/ATTORNEY'S
 Plaintiff: EDWARD G. ALARIO POHLSON & MOORHEAD
 CAROL ALARIO POHLSON & MOORHEAD

 Defendant: CHRISTOPHER PHAM DO DAVIS, GRASS, GOLDSTEI
 DESERT REGIONAL MEDICAL CENTER AGAJANIAN MCFALL WEISS
 SOUTHERN CALIFORNIA PERMANENTE
 KAISER FOUNDATION HEALTH PLAN
 DESERT MEDICAL GROUP/OASIS IPA

 ---------------------------------------------------------------------
 Superior Court of California, County of Riverside
 www.riverside.courts.ca.gov Page: 100

 HONORABLE - JUDGE H. Morgan Dougherty

• A recipient of Medicare benefits appeals an order requiring her to reimburse the Secretary of the Department of Health and Human Services for the amount of those benefits, from a malpractice settlement she received from one of her health care providers.
• The district court concluded that federal law, specifically the Medicare Secondary Payer provisions of the Medicare Act, entitled the Secretary to such reimbursement.
• Jeannette D. Brown received medical treatment on August 6 and 8, 2000 from health care facilities owned and operated by Kaiser Foundation Health Plan for the Mid-Atlantic States ("Kaiser"). On August 9, Brown was admitted to the Fairfax Hospital emergency room for a perforated sigmoid colon and significant sepsis, where she remained for forty-two days. 

Arrindell worked for the Capital Area Permanente Medical Group, P.C. (CAPMG), which recruits, employs, supervises, and compensates physicians for the purpose of providing physicians, under contract, to Kaiser Foundation Health Plan of the Mid-Atlantic States, Inc. Each eligible physician is allowed to purchase two shares of CAPMG stock after twenty-four months of service, a third share after thirty-six months, and a fourth share after forty-eight months of service. The bylaws of CAPMG provide that in making the determination of whether to recommend a physician for shares, the Board of Directors (Board) considers a physician's written performance appraisal.

LARRY T. WIGGINS
v.   Record No.  1542-95-4                                              
OPINION BY                                                                                                                                                                                     
JUDGE CHARLES H. DUFF
FAIRFAX PARK LIMITED PARTNERSHIP            

MAY 14, 1996
AND
EMPLOYERS MUTUAL CASUALTY COMPANY  
FROM THE VIRGINIA WORKERS' COMPENSATION COMMISSION

• California Department of Managed Health Care (DMHC)
  
  
• Daniel Zingale, DMHC Director
  
  
• Andrew George, Senior Legal Counsel, DMHC, HMO Help Center
  
  
• Kaiser Foundation Health Plan/Kaiser Permanente Medical Group
  
  
• Pacific Business Group on Health (PBGH)

https://kaiserpapers.com/legalstuff/severovskaiser.html

CASE NO. BC346842

ASSIGNED FOR ALL PURPOSES TO:
Honorable John Shepard Wiley, Dept. “50"

FIRST AMENDED 
COMPLAINT FOR INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS

SEVERO CAUSING, JR., RUTH GALLENERO, PETE CAUSING, MAY LEYRIT CAUSING, 
CHRISTINA CAUSING, KAYRA CAUSING, MAY CAUSING, IRENE DEANON, LAURIE 
MICHELLE DEANON,JAN MICHAEL DEANON, HEATHER JOY DEANON, ESTRELLA CAMPOS, 
BOY CAMPOS, JEANNANE CAMPOS, JEFFREY CAMPOS, LUNA POSA, TONY POSA, 
MARK POSA, CHRISTIE POSA, CARMEN AVILA, RUBY CAUSING PANUNCIALMAN, 
AS PERSONAL REPRESENTATIVES OF THE ESTATE OF SOTERO CAUSING, 

DECEDENT,

Plaintiffs,

v.

KAISER FOUNDATION HEALTH PLAN, INC., KAISER FOUNDATION HOSPITALS AND 
SOUTHERN CALIFORNIA PERMANENTE MEDICAL GROUP, ARASH KHARESTAN, M.D., 
GERALD BECKHAM, M.D., HUGH GREATHOUSE, M.D. and DOES 1 through 100, inclusive,

Defendants.

Nichols vs. Kaiser - $1,100,000 against Kaiser Permanente
John P. Blumberg, Esq. and Nancy G. Wanski, Esq. of Blumberg Law Corporation, Long Beach represented the Nichols Family. 
She and her husband decided not to have more children and plaintiff made plans to undergo a tubal ligation. Kaiser tested the plaintiff's blood on June 4, 2001 and determined that she was 10 weeks pregnant.  The plaintiff was never notified that she was pregnant and the report was never placed in the chart.  On June 27 the plaintiff met with the physician for a pre-op consultation.  The doctor ordered a urine test for pregnancy and the sample was provided by the patient, however Kaiser performed the test.  At this point the plaintiff was approximately 13 weeks pregnant. On the day of the tubal ligation surgery, the nursing staff printed a copy of the June 4, 2001 pregnancy test and put it in the chart. The doctor testified that her custom and practice was not to review the chart before performing tubal ligation surgery, but to rely on the nursing staff to tell her if the pregnancy test was positive. She said that the nurses neither told her that the urine test had not been performed nor that the previous labs had been positive for pregnancy.  Plaintiff was given a general anesthetic and the doctor began the laparoscopic procedure. She noted during the surgery that the uterus was enlarged, but presumed that it was a fibroid, since she believed that the pregnancy test had been negative. The doctor told plaintiff’s husband that the operation went fine but that she found a fibroid uterus.
The story just gets worse.  This is another Kaiser Permanente Bellflower Story.

CCP §998 was amended, effective January 1, 1998, to include medical malpractice arbitrations within its scope, and in particular, provisions for reimbursement of costs.  Until this last year, Kaiser has argued that the amendment to CCP §998 impaired the obligation of existing contracts and therefore was not enforceable, and that the vested substantial rights of the contracting parties were protected from legislative impairment.

Kaiser has changed its position.  In an August 21, 2000, letter, senior counsel, Angel A. Santos, stated, "Kaiser Foundation Health Plan, Inc. will no longer object to California Code of Civil Procedure section 998 demands on the basis of inapplicability to the Kaiser arbitration [system]..."

I urge any plaintiff's attorney involved in a Kaiser arbitration to make appropriate statutory offers to compromise.

Arbitration in California Managed Health Care Systems By Marcus Nieto and Margaret Hosel 

One of the nation’s best-known HMOs has ignited a furor by requiring psychiatrists at one of its California facilities to write prescriptions for patients they have never seen.

Kaiser Permanente’s policy for psychiatrists in its San Diego area facilities stipulates that when they receive a request for a prescription for a patient that a staff psychologist, social worker, or family therapist is seeing, they are to comply with the request and write the prescription without scheduling a visit with the patient.

Widespread publicity about the policy, which was the focus of an April 13 Los Angeles Times article, has generated heated responses from psychiatrists and others concerned about how such a policy could seriously compromise patient care and put psychiatrists in ethical jeopardy.

The article revealed that a state agency was investigating this practice and that a psychiatrist who lost his job after refusing to follow the policy was suing Kaiser Permanente.

The day after the article appeared, APA issued a press release strongly condemning the policy as an example of "unethical" medical practice.

In that statement APA President-elect Daniel Borenstein, M.D., a private practitioner in Los Angeles, said it is "unethical and substandard practice for a psychiatrist to prescribe medication for a patient without personally examining that patient and determining the necessity for medication."

He emphasized that Kaiser Permanente’s practice "trivializes mental illness and the special medical skills of psychiatrists in diagnosing and treating it."

APA’s press release cites two paragraphs of its ethics code that may be violated by Kaiser’s prescribing policy. One states, "When the psychiatrist assumes a collaborative or supervisory role with another mental health worker, he/she must expend sufficient time to assure that proper care is given. It is contrary to the interests of the patient and to patient care if he/she allows himself/herself to be used as a figurehead."

Another relevant paragraph says that in relationships between psychiatrists and psychologists, "The physician should not delegate to the psychologist or, in fact, to any nonmedical person, any matter requiring the exercise of professional medical judgment."

The San Diego psychiatrist who filed suit against Kaiser, Thomas Jensen, M.D., wants the court to step in and order the HMO to stop the practice, which he contends violates state law about prescribing and dispensing drugs. Kaiser fired Jensen in December after he refused to prescribe medications for HMO patients he had never seen.

Dennis Cook, M.D., coordinating chief of psychiatrists for Kaiser’s Southern California division, is quoted by the Times as saying that Jensen was well aware of the policy when he was hired. In his suit, Jensen said that on his first day on the job, he received medication requests from social workers, social work interns, and marriage and family therapists.

"I was astounded that this was happening," Jensen said. "I was trained that you don’t prescribe medicines for patients you’ve never seen." He said he had seen drug recommendations from nonphysicians that if prescribed would have jeopardized patients’ health.

Oliver Goldsmith, M.D., medical director and chair of the board of Southern California Permanente Medical Group, said in an April 20 press release that contrary to reports, Kaiser does not have an official policy of requiring psychiatrists to prescribe without seeing the patient. He said psychiatrists in the medical group developed a "multidisciplinay team-based approach" in which "psychiatrists in San Diego work very closely on a regular basis with other mental health professionals in a group practice. It is a physician-designed and physician-driven approach in which physicians exercise their medical judgment and authority in rendering care."

Joel Hyatt, M.D., assistant associate medical director for the Southern California Permanente Medical Group, said that "all decisions to examine the patient or to prescribe medication are made by physicians."

In defending the policy, Cook stated that he believes "it’s very ethical." He noted that all of its psychiatrists are informed of and agree to the prescription policy before they are hired. He explained that Kaiser psychiatrists can refuse to follow through on a prescription request from a nonphysician therapist if they believe that medication is not appropriate for a particular patient. If medication is likely to benefit the patient, however, they are obligated to prescribe one.

While psychiatrists may be well informed about the policy, as Cook said, there is a serious question about how well informed patients are.

Sam Muszynski, director of the APA Office of Healthcare Systems and Financing, raised the issue of whether patients are getting any meaningful informed consent when their medication information comes from nonphysicians. "It is hard to believe," he said, that psychologists, social workers, and other therapists can describe the wide range of side effects for which patients need to be alert or can diagnose symptoms that may be the result of interactions with other drugs with anywhere near the degree of competency that a physician can provide.

Kaiser did acknowledge after the suit was filed that it is aware that its prescribing standards differ from those used by other treatment facilities in the region. Cook told the Times that the policy allows psychiatrists to see more patients by eliminating the need for them to conduct duplicate interviews for patients who have already been assessed by a nonphysician therapist. He also called the attacks "self-serving" since, he said, they come from private practitioners who stand to gain from additional office visits if Kaiser is forced to alter its policy.

The president of the San Diego Psychiatric Society (SDPS), Kenneth Khoury, M.D., does not see any benefit for patients or physicians in the policy. The policy clearly fails to meet the standard of care in the community, he told Psychiatric News, and "exceeds the boundaries" of what goes into providing "quality care and safe care." There is no room for negotiation on this issue, he noted. He said that the district branch has asked the Medical Board of California to clarify its understanding "that the standards of care and state law say that physicians must conduct face-to-face interviews" with patients before they write prescriptions for them.

Khoury has also asked Michael Newhouse, M.D., chair of the SDPS Ethics Committee, to "review the concerns" raised about possible ethical violations and report his findings to the SDPS Council. He said that 15 San Diego psychiatrists work for that area’s Kaiser Permanente group, of whom three are members of the district branch.

Yvonne Ferguson, M.D., president of the California Psychiatric Association (CPA), said she was "shocked to learn that Kaiser, which enjoys a good reputation in California, had such a policy." She suggested that the controversy "will bring the whole scope-of-practice issue into bold relief," adding that psychiatrists "cannot shrink from confronting this issue. Also, legislators will have to look at [scope of practice], and the public will have to be educated about implications of Kaiser’s policy."

The suit also charges Kaiser and the Southern California Permanente Medical Group with violating consumer protection laws by engaging in deceptive advertising, such as touting that at its HMOs "physicians alone manage all aspects of care" and that "medical decisions are made by physicians in consultation with their patients, not by health plan administrators. . .no third party comes between medical decisions."

Jensen, who moved from Maine to work for Kaiser, now teaches part time in the psychiatry department at the University of California at San Diego. Explaining why he chose to go the legal route, he commented, "As a physician I was required not only to refuse to [prescribe without seeing the patients], but to do what I could to end the practice because it endangered patients."

Kaiser is the nation’s largest not-for-profit HMO and has 8 million subscribers.—K.H.

[Thomas S. Jensen, M.D., v. Kaiser Foundation Health Plan, et al.; case no. 825090-6] 

One of the nation’s best-known HMOs has ignited a furor by requiring psychiatrists at one of its California facilities to write prescriptions for patients they have never seen.

Kaiser Permanente’s policy for psychiatrists in its San Diego area facilities stipulates that when they receive a request for a prescription for a patient that a staff psychologist, social worker, or family therapist is seeing, they are to comply with the request and write the prescription without scheduling a visit with the patient.

Widespread publicity about the policy, which was the focus of an April 13 Los Angeles Times article, has generated heated responses from psychiatrists and others concerned about how such a policy could seriously compromise patient care and put psychiatrists in ethical jeopardy.

The article revealed that a state agency was investigating this practice and that a psychiatrist who lost his job after refusing to follow the policy was suing Kaiser Permanente.

The day after the article appeared, APA issued a press release strongly condemning the policy as an example of "unethical" medical practice.

In that statement APA President-elect Daniel Borenstein, M.D., a private practitioner in Los Angeles, said it is "unethical and substandard practice for a psychiatrist to prescribe medication for a patient without personally examining that patient and determining the necessity for medication."

He emphasized that Kaiser Permanente’s practice "trivializes mental illness and the special medical skills of psychiatrists in diagnosing and treating it."

APA’s press release cites two paragraphs of its ethics code that may be violated by Kaiser’s prescribing policy. One states, "When the psychiatrist assumes a collaborative or supervisory role with another mental health worker, he/she must expend sufficient time to assure that proper care is given. It is contrary to the interests of the patient and to patient care if he/she allows himself/herself to be used as a figurehead."

Another relevant paragraph says that in relationships between psychiatrists and psychologists, "The physician should not delegate to the psychologist or, in fact, to any nonmedical person, any matter requiring the exercise of professional medical judgment."

The San Diego psychiatrist who filed suit against Kaiser, Thomas Jensen, M.D., wants the court to step in and order the HMO to stop the practice, which he contends violates state law about prescribing and dispensing drugs. Kaiser fired Jensen in December after he refused to prescribe medications for HMO patients he had never seen.

Dennis Cook, M.D., coordinating chief of psychiatrists for Kaiser’s Southern California division, is quoted by the Times as saying that Jensen was well aware of the policy when he was hired. In his suit, Jensen said that on his first day on the job, he received medication requests from social workers, social work interns, and marriage and family therapists.

"I was astounded that this was happening," Jensen said. "I was trained that you don’t prescribe medicines for patients you’ve never seen." He said he had seen drug recommendations from nonphysicians that if prescribed would have jeopardized patients’ health.

Oliver Goldsmith, M.D., medical director and chair of the board of Southern California Permanente Medical Group, said in an April 20 press release that contrary to reports, Kaiser does not have an official policy of requiring psychiatrists to prescribe without seeing the patient. He said psychiatrists in the medical group developed a "multidisciplinay team-based approach" in which "psychiatrists in San Diego work very closely on a regular basis with other mental health professionals in a group practice. It is a physician-designed and physician-driven approach in which physicians exercise their medical judgment and authority in rendering care."

Joel Hyatt, M.D., assistant associate medical director for the Southern California Permanente Medical Group, said that "all decisions to examine the patient or to prescribe medication are made by physicians."

In defending the policy, Cook stated that he believes "it’s very ethical." He noted that all of its psychiatrists are informed of and agree to the prescription policy before they are hired. He explained that Kaiser psychiatrists can refuse to follow through on a prescription request from a nonphysician therapist if they believe that medication is not appropriate for a particular patient. If medication is likely to benefit the patient, however, they are obligated to prescribe one.

While psychiatrists may be well informed about the policy, as Cook said, there is a serious question about how well informed patients are.

Sam Muszynski, director of the APA Office of Healthcare Systems and Financing, raised the issue of whether patients are getting any meaningful informed consent when their medication information comes from nonphysicians. "It is hard to believe," he said, that psychologists, social workers, and other therapists can describe the wide range of side effects for which patients need to be alert or can diagnose symptoms that may be the result of interactions with other drugs with anywhere near the degree of competency that a physician can provide.

Kaiser did acknowledge after the suit was filed that it is aware that its prescribing standards differ from those used by other treatment facilities in the region. Cook told the Times that the policy allows psychiatrists to see more patients by eliminating the need for them to conduct duplicate interviews for patients who have already been assessed by a nonphysician therapist. He also called the attacks "self-serving" since, he said, they come from private practitioners who stand to gain from additional office visits if Kaiser is forced to alter its policy.

The president of the San Diego Psychiatric Society (SDPS), Kenneth Khoury, M.D., does not see any benefit for patients or physicians in the policy. The policy clearly fails to meet the standard of care in the community, he told Psychiatric News, and "exceeds the boundaries" of what goes into providing "quality care and safe care." There is no room for negotiation on this issue, he noted. He said that the district branch has asked the Medical Board of California to clarify its understanding "that the standards of care and state law say that physicians must conduct face-to-face interviews" with patients before they write prescriptions for them.

Khoury has also asked Michael Newhouse, M.D., chair of the SDPS Ethics Committee, to "review the concerns" raised about possible ethical violations and report his findings to the SDPS Council. He said that 15 San Diego psychiatrists work for that area’s Kaiser Permanente group, of whom three are members of the district branch.

Yvonne Ferguson, M.D., president of the California Psychiatric Association (CPA), said she was "shocked to learn that Kaiser, which enjoys a good reputation in California, had such a policy." She suggested that the controversy "will bring the whole scope-of-practice issue into bold relief," adding that psychiatrists "cannot shrink from confronting this issue. Also, legislators will have to look at [scope of practice], and the public will have to be educated about implications of Kaiser’s policy."

The suit also charges Kaiser and the Southern California Permanente Medical Group with violating consumer protection laws by engaging in deceptive advertising, such as touting that at its HMOs "physicians alone manage all aspects of care" and that "medical decisions are made by physicians in consultation with their patients, not by health plan administrators. . .no third party comes between medical decisions."

Jensen, who moved from Maine to work for Kaiser, now teaches part time in the psychiatry department at the University of California at San Diego. Explaining why he chose to go the legal route, he commented, "As a physician I was required not only to refuse to [prescribe without seeing the patients], but to do what I could to end the practice because it endangered patients."

Kaiser is the nation’s largest not-for-profit HMO and has 8 million subscribers.—K.H.

[Thomas S. Jensen, M.D., v. Kaiser Foundation Health Plan, et al.; case no. 825090-6] 

   Heather O'Rourke, the young actress pulled into a supernatural vacuum in the "Poltergeist" movies, died because the doctors who treated her throughout her childhood failed to diagnose a longstanding obstruction of the small bowel that led to her death on Feb. 1, according to a wrongful-death suit filed Wednesday by a law firm representing the girl's mother.

   The 12-year-old actress, who warned, "They're heeere!" in "Poltergeist" and "They're baaack!" in the sequel, died on the operating table at Children's Hospital of San Diego. At the time, hospital officials said, death was attributed to septic shock, which caused cardiac arrest. Officials explained that septic shock was brought on by congenital stenosis of the intestine, a bowel blockage the girl evidently had from birth.

   The suit, filed in San Diego Superior Court against Kaiser Foundation Hospital of San Diego and Southern California Permanente Medical Group on behalf of Kathleen O'Rourke Peel, Heather's mother and the administrator of her estate, did not specify damages. She lives in the San Diego County community of Lakeside.

   Spokesmen for the Kaiser hospital and the medical group declined to comment on the charges in the lawsuit.

   Children's Hospital was not included as a defendant in the lawsuit.

   Sanford M. Gage, the family's attorney, said that if the Kaiser doctors who treated Heather from birth had properly diagnosed the bowel obstruction, rather than simply prescribing medication for an intestinal inflammation, they could have performed a simple operation "that would have cured her."
 

   Exploratory Surgery

   The girl exhibited flu symptoms on Jan. 31. The next day her condition worsened and she was taken by ambulance to a nearby hospital, then by helicopter to Children's, where exploratory bowel surgery was performed.

   The "Poltergeist" films, first released in 1982, told of a mid-America family living an idyllic life in the suburbs when their young daughter begins communing with creatures she sees on the television screen.

1988 © the Los Angeles Times

Thursday July 9 5:25 PM EDT
Kaiser sued for not covering Viagra
By TERRI VERMEULEN

LOS ANGELES, July 9 (UPI) - An elderly Southern California man has filed the first lawsuit against Kaiser Permanente, the nation's largest health maintenance organization, over the company's decision not to cover costs for the anti-impotence drug, Viagra.

The lawsuit, filed this week on behalf of 77-year-old Louis Marcil in Los Angeles Superior Court, alleges that Kaiser Permanente engaged in fraudulent and unfair business practices, false advertising and intentionally misled consumers by denying benefits for Viagra.

Marcil's lawyer, Frank Darras, told UPI today that Kaiser Permanente has been bombarding senior citizens in California with advertising material that claims it will cover ``all serious health care'' needs, but refusing to pay for Viagra even when Kaiser doctors recommend it for patients.

Kaiser Permanente, which has 9.1 million members in 19 states and Washington DC, announced last month that it wouldn't cover Viagra because national coverage of 10 Viagra pills a month would cost at least $100 million a year.

Darras says Marcil paid $50 for five pills when he learned Kaiser wouldn't cover the costs, but can't afford to continue paying that much.

The Burbank man, who's been married nearly 52 years, was left impotent following radiation treatment for prostate cancer in 1996. He says Viagra ``really does work.''

Similar lawsuits have already been filed against Aetna and U.S. Healthcare.

Copyright 1998 by United Press International.

All rights reserved.

"California Supreme Court to Hear Kaiser Case" (Los Angeles Times, November 3, 1995) explains problems that can occur when health plan contracts restrict a patient to using binding arbitration to resolve malpractice or other claims against a plan in lieu of a jury trial. Binding arbitration favors the health plan by allowing delays in the hearing dates so that patients must spend more to pursue resolution. The California Supreme Court will hear the appealed case of a man who was not diagnosed properly with lung cancer over a five year period and tried to use the binding artibration against Kaiser without success. The decision of the lower court found the company's "arbitration process to be corrupt... in general."

XII.

SUPREME COURT RULING NARROWS ERISA

May, 1995

Most Californians and Americans now get health insurance through plans which are regulated by the federal Employee Retirement Income Security Act, or ERISA. This law exempts them from suits for noncompliance with state insurance regulations. CCEMHC views the ERISA preemption as a hindrance to meaningful health care reform on the state level.

On April 26, 1995, the Supreme Court ruled in favor of New York State (No. 93-1408) against Blue Cross/Blue Shield et al. New York had instituted a surcharge on insurance companies to finance some public health care programs. The above companies refused to pay the surcharge and sued based on the ERISA law. Justice Souter delivered the unanimous opinion which implied that ERISA could no longer provide across-the-board protection from state insurance laws. The Wall Street Journal published an excellent discussion of the decision, "Justices Allow States' Overhaul of Health Care," April 27, 1995. To get an online copy of the opinion, see: http://www.law.cornell.edu.

ERISA CHALLENGED IN FEDERAL APPEALS COURT IN SAN FRANCISCO
July, 1995

The federal appeals court in San Francisco has defined the scope of the ERISA law as it applied to managed care, in a way that gives consumers an opening to sue when their insurance plans interfere with their health care. According to the Jun 19, 1995 ruling, plans are protected from state regulations by ERISA in their activities of administering health benefits. But they are not exempted by ERISA when they become involved in medical treatment decisions.

ERISA EXPLAINED
November, 1995

Two attorneys, Henry Rossbacher and Karen Kerner, from the Los Angeles law firm, Rossbacher and Associates, spoke at a CCEMHC membership meeting on October 28. They presented their ideas about avenues and obstacles in pursuing grievances against managed care companies. Here is a summary of their talk, with an emphasis on how the federal ERISA law works.

ERISA, the Employee Retirement Income Security Act, allows certain qualified insurance plans (the majority in California) to be exempted from state law. The technical term for this effect is "preemption." Preemption means taking away one set of rights and replacing it with another. Under ERISA there is a trade-off of the right to sue employer-sponsored insurance plans in exchange for greater security of the retirement fund (which is protected from being depleted by paying a big judgment in state court) and other protections such as the company not being allowed to fire you just because you are about to be vested.

"Bad faith" is normally grounds for a suit under state law. In the context of health insurance, it means that an insurance company can be held accountable if it deliberately denies payment for care that is covered by the plan. It is a tort right of action which allows for the prospect of punitive damages for violation of the carrier's obligations. ERISA, however, makes it impossible to take legal action against these plans if they behave in "bad faith," since it preempts state law.

Government employees do NOT fall under ERISA. These people include federal, state, county, and public school employees. The Fox case against HealthNet, in which a judgment of $89 million was won by attorney Mark Hiepler, involved a patient who was an employee of the school district. Therefore her right to sue on the basis of "bad faith" was not preempted by ERISA. Bad faith was demonstrated by showing that the company denied payments of an expensive procedure for Fox because they said it was "experimental," while they had paid for the same procedure for the wife of a HealthNet executive.

ERISA does NOT preempt one kind of state regulation of health plans: laws such as we have in California (California Insurance Code, Section 10125), that say that group health benefit packages MUST include a mental health benefit. This exception to ERISA was tested in a case in Massachusetts whose verdict was upheld by the U.S. Supreme Court. However, nothing was said about how much or what kind of mental health coverage should be included, as long as treatment was "medically necessary." This may help explain why some plans seem to be making a mere token effort to cover mental health care, instead of just saying they don't cover it.

You may sue a plan that is regulated by ERISA, to try to obtain the use of your insurance benefits. Ordinarily the suit is filed in a federal court, and punitive damages are not allowed (ERISA does, however, permit recovery of attorney fees, at the court's discretion). That means it may not be worth much to a patient or a practitioner to go through the suit, and it may be hard to fund the case. Another caution: in all ERISA suits, you must first discover and exhaust all administrative remedies, i.e., grievance procedures and appeals within the plan, before going to court. (This is so even if, as one of the consumers at the meeting sardonically said about internal grievance procedures, "You just go to a higher level of THEM!")

While the insurance company or HMO may be protected by ERISA, practitioners need to know that they themselves are not. Malpractice is governed by state law, and providers on panels are still at risk of being sued for malpractice if they fail to inform patients that they need certain tests or treatments.

Mr. Rossbacher cautioned that it would be easier and possibly more effective to use non-litigation remedies before or instead of attempting litigation. For instance, there may be a great court ruling in one locale, but that wouldn't change the law if other courts around the country ruled differently. Also, case law on ERISA health care benefits has so far tended to favor employers.

BINDING ARBITRATION AND MANAGED CARE DISPUTES
November, 1995

"California Supreme Court to Hear Kaiser Case" (Los Angeles Times, November 3, 1995) explains problems that can occur when health plan contracts restrict a patient to using binding arbitration to resolve malpractice or other claims against a plan in lieu of a jury trial. Binding arbitration favors the health plan by allowing delays in the hearing dates so that patients must spend more to pursue resolution. The California Supreme Court will hear the appealed case of a man who was not diagnosed properly with lung cancer over a five year period and tried to use the binding artibration against Kaiser without success. The decision of the lower court found the company's "arbitration process to be corrupt... in general."

PSYCHOLOGIST-ATTORNEY SPECIALIZES
IN MANAGED MENTAL HEALTH CARE CASES
April, 1996

Bryant Welch, J.D., Ph.D., has opened a specialty law practice to represent mental health consumers and practitioners who have been injured by managed care. Although his office is in Maryland, he will take cases from most areas of the country, including northern and southern California. He handles about 80% of the preparatory work and then coordinates with attorneys in his clients' local areas who conduct the litigation there. Unlike many attorneys, Dr. Welch will accept mental health cases on contingency. He is interested in cases involving profound adverse consequences to mental health consumers due to actions of their managed care company. Cases of practitioners terminated without cause, defamed, or abused are also of interest to Dr. Welch.

Dr. Welch is a clinical psychologist who has worked with the American Psychological Association for the past ten years to counter harm done by managed care. While finishing his law degree, he decided to follow his deep interest in psychology. He was trained at Washington Psychoanalytic Institute and practiced as an analyst for ten years. Then, in working on policy matters at APA, he eased back into using his legal training and founded and headed the APA Practice Directorate. He has now left APA to focus more on litigation against managed care.

Contact Bryant Welch, J.D., Ph.D. and Associates at 11261 South Glen Road, Potomac, MD 20854 or by phone at (301) 983-4344.

WELCH SPEAKS ON USING THE COURTS TO COMBAT MANAGED CARE ABUSES
December, 1996

On November 16, Dr. Welch spoke in San Francisco to an audience of CCEMHC members and interested consumers and attorneys. He believes consumers and professionals must use the courts to address managed mental health care abuses. In his law practice, he said that a third of the cases involve children who died because they were denied appropriate mental health treatment.

In spite of slowness of the legal system to respond to managed care complaints in the past, Dr. Welch is optimistic about our chances for success, given some recent developments.

Among them:
 

1. The ability of managed care to hide behind the ERISA law that preempts plans from state insurance regulation is being eroded. Within the past 15 months, four circuit courts have upheld negligence claims against managed care companies for harmful review decisions. In addition, the Supreme Court, in a ruling against Travelers Insurance (Travelers v. Cuomo, 1995), said that ERISA only applies to laws about insurance plans' structure, making these companies vulnerable to suits for malpractice and violation of patients' and professionals' rights.
2. Managed care has overreached itself to such an extent that there are many horror stories that can be used for publicity, increasing public demand for greater legislative control of managed care and for alternative systems. As Dr. Welch commented, "The public never signed off on inferior mental health care."
3. Adding to the public's awareness of how they have been deceived, Dr. Welch believes, will be the increasing numbers of elderly patients joining HMOs. The large, powerful seniors organizations will demand changes in managed care.

Dr. Welch distributed a handout, "When Can Managed Care Companies Be Sued?" which outlined three types of possible claims:

1. Has the patient been denied care that is 'medically necessary'? Managed care companies may promise certain benefit levels 'to the extent it is medically necessary' but then define medical necessity in a manner that no responsible clinician would support.
2. Has the patient been denied reimbursement for care that is medically necessary? This question raises the issue of insurance 'bad faith' law, in which if an insurance company denies a claim 'in bad faith' (i.e., knowing the patient needs the care but denying it for financial self-interest), they can be liable for punitive damages determined by a jury.
3. Has the patient received substandard care? This is a standard malpractice action but can also be applied to managed care companies if the hospital, HMO or provider of care is the 'agent' of the managed care company. Most in-network providers meet the test of 'agency.' Under a legal doctrine of vicarious liability, the managed care company is legally responsible for what its 'agents' do."

NEW JERSEY PSYCHOLOGISTS SUE MCC OVER CONTRACT TERMINATIONS
June, 1996

On May 29 the New Jersey Psychological Association (NJPA), along with seven psychologists, announced that it has filed a complaint against MCC Behavioral Care, Inc. in the Superior Court of New Jersey, Morris county. The complaint was filed as a result of MCC's termination of the psychologists from its provider network "without cause." The complaint states that the manner in which MCC utilizes its no-cause termination is against public policy, a breach of the provider agreement, and fraudulent and harmful to both patients and providers. The case is believed to be the first of its kind against a managed behavioral healthcare company.

The complaint alleges that MCC substituted its judgment for that of the psychologists concerning the appropriateness of requested professional services. Further, the complaint alleges that MCC improperly concluded that each of the psychologists overutilized the professional sessions available to their patients and on that basis terminated the psychologists, labeling them "not managed care compatible." MCC took this action despite the fact that the psychologists had not exceeded the number of sessions promised the clients in their benefit packages. The complaint states that the unfettered right to terminate a provider has a chilling effect on the standard of care afforded to patients.

LEGAL ASSISTANCE FOR HEALTH CARE CONSUMERS
October, 1996

Businessman John Metz, a close ally of CCEMHC, works for consumer protection through his company, Phoenix Business Group (PBG). PBG defines consumers as: individuals, health care providers and provider groups, hospitals, and local, state and federal governmental agencies.

The company offers assistance to consumers in two ways: First, as a for-profit business, it assists consumers who have not been properly reimbursed by an insurer for covered services, or who have services improperly denied by an insurer, HMO, or other managed care organization. In these cases, PBG can usually arrange to have the situation reviewed, at no charge and with no obligation, by claims review experts, consultants, and legal advocates. These professionals may then take action to obtain the denied benefits. They work on a contingent fee basis, with little or no up-front cost to the consumer.

Second, in its nonprofit role, PBG participated in the drafting of the regulations which currently govern the claims practices of insurers in California, and it was a significant contributor to the drafting of Propositions 214 and 216.

For more information, contact PBG by phone at 1-800-TRUSTED, or by e-mail at pbg@sonic.net, or throught its website at http://nuworld.com/pbg.

MEDICARE PATIENTS ALLOWED TO SUE HMOS FOR DAMAGES
November, 1996

A new panel of the U.S. Court of Appeals has ruled that patients may sue HMOs providing care under Medicare for damages, when the company's denial of care results in injury or death. Prior to this ruling, claims had to be presented to HCFA and could only ask for payment of the benefits due.

JUDGE ORDERS AETNA TO DISCLOSE CAPITATION DATA
December, 1996

On November 9, 1996, U.S. District Court Judge Denis R. Hurley ruled that Aetna must turn over confidential company data on patient care problems in markets where capitation has been in effect. The data include records prepared for the company's quality and utilization management committees, as well as on deselection of doctors whose care costs more than Aetna wants to pay.

The case was filed by the League of Physicians and Surgeons on behalf of Mara Maltz of North Bellmore, New York. Mrs. Maltz's two children suffer from Crohn's disease. She was distraught when she learned that her childrens' lifelong pediatricians were among the 625 primary care physicians on Long Island who refused to accept Aetna's shift to capitation on ethical grounds. Aetna subsequently dropped the doctors from the plan. Mrs. Maltz wanted her children to continue under their care.

The attorney for the plaintiff argued that capitation creates a financial incentive for doctors to reduce the level of care for their patients. The ruling is the first time any judge has officially recognized the possibility that enrollees can be hurt by insurance plans whose payment method provides a monetary incentive to reduce quality of care.

LANDMARK ERISA DECISION IN MENTAL HEALTH CASE
April/May, 1997

On February 5, the U.S. District Court for the District of Connecticut handed down a landmark decision involving employer responsibilities under the ERISA law (Crocco v. Xerox Corp.). This federal law makes managed care largely immune from civil suits for punitive damages, when it is used by corporations that are self-insured. In this case, the court held that when a corporation, such as Xerox, contracts with a managed care company, in this case American PsychManagement (now part of Value Behavioral Health), the employer still has a responsibility to act in the best interests of its employees. Denials of benefits by the managed care plan based on lack of medical necessity must be reviewed independently by the benefit plan administrator at the corporation. If this review is cursory or one-sided, e.g., considers only the employer's desire to keep health care costs down, the employer may be sued for damages.

FEDERAL BILL WOULD AX ERISA BARRIER TO LAWSUITS
Summer, 1997

On May 22, Congressmen Pete Stark (D-Hayward) and George Miller (D-Martinez) introduced the Managed Care Plan Accountability Act (HR 1749), a bill that would allow more suits against managed care companies for punitive damages. Currently, a provision in the 1974 law, the Employee Retirement Income Security Act, or ERISA, shields most employer-based health plans from state regulation. ERISA is one of the main reasons consumers have had such difficulty holding health plans liable for malpractice, bad faith, and other abuses. HR 1749 would eliminate the ERISA preemption.

Mental Health Practitioners Seek Greater Leverage with Managed Care

January, 1998

A suit brought by the New Jersey Psychological Association against MCC Behavioral Health is progressing, according to a November 21, 1997, report. While several counts in the complaint were referred to arbitration and have been dropped, the important remaining counts can now proceed to litigation. The suit contends that health plans who terminate providers without cause are engaging in violation of public policy, tortious interference with economic advantage, and breach of fundamental fairness. All mental health professionals contracted with managed care plans have a stake in the result of this case.

TAKING HMOS TO COURT
January, 1998

Texas has recently passed a law that permits malpractice lawsuits against managed care companies. Already we have a powerful example of how such laws can operate on the side of consumers against HMO abuses.

On December 17, Kaiser Permanente in North Texas settled a suit with the family of a man who died of undiagnosed heart disease after repeatedly complaining to Kaiser doctors of chest pain. The settlement, for $5.35 million, came after a mock jury heard evidence of a Kaiser managereal decision to arbitrarily cut hospital admissions by 30%, and expressed its outrage at Kaiser by awarding the family $62 million.

Adding to the shock value of the case was a transcript of a speech by Kaiser's Resource Management Director, in which he boasted to his colleagues about how he and another manager came up with the ideas for slashing care, while getting drunk during a plane flight delayed in landing. The speech cited numerous instances of the HMO interfering with the physician-patient relationship and risking patients' lives in the interest of the bottom line. By allowing the family to sue the HMO, the new law in Texas gave the public a chance to hear the braggadocio, the doublethink, and the contempt for patient care that managed care so often exhibits behind the scenes.

Here are a few excerpts from the speech:

"The stuff you're going to see in the 1995 plan was generated in June on a Friday afternoon...I don't know how many Wild Turkeys on the Rocks I had, and he's Irish...so he had Irish whiskey, and we're flying over L.A. trying to land.."

"We basically said to the urgent care doctors, 'If you value your job, you won't say anything about hospitalization. All you say is, "I think you need further evaluation, and Dr. Schmoe is going to come in and talk to you." ' "

"We need to get away from this word, 'discharge.' There is no such thing as 'discharge'...You're transitioning the patient into another health care environment."

More such suits are coming on the heels of this one.

On January 5, 1998, a class action suit was filed against Pacificare for making false and misleading statements about its acquisition of FHP International Corp. By recklessly withholding information about FHP's difficulties in controlling rising health care costs, the suit alleges, Pacificare reaped $14.8 million in inflated stock prices.

"TERMINATION WITHOUT CAUSE" CLAUSES UNDER ATTACK
by Richard Leslie, Esq.
April, 1998

Reprinted (abridged) from The California Therapist, July/August, 1997, with the author's permission.

Most therapists who are familiar with managed care contracts are aware that almost all contracts contain a clause that allows the managed care company to terminate the contract "without cause." Managed care companies claim that they need to have the flexibility to adjust the size of panels based upon economic considerations that exist at any particular time. HMOs want to have the right to reduce the size of their panels to help them manage the costs and quality of those panels. Terminations for cause, of course, are permissible. However, health practitioners have a right to expect that they will be informed of the reasons for such terminations and that they will have an opportunity to show why the "cause" asserted by the payer is incorrect.

As many are aware, some managed care companies will terminate a provider under the "no cause" clause in order to avoid the necessity of explaining or justifying their reasons for deselection of a therapist. Many therapists fear that if their utilization patterns are not to the satisfaction of the managed care company, they will be terminated under the "no cause" clause, and will thus be deprived of any chance to challenge the termination. Now, primarily as a result of two court decisions, it appears that the pendulum is shifting.

In a 1996 case entitled Harper v. Healthsource of New Hampshire, the New Hampshire Supreme Court held that, "...the public interest and fundamental fairness demand that a health maintenance organization's decision to terminate its relationship with a particular physician provider must comport with the covenant of good faith and fair dealing and may not be made for a reason that is contrary to public policy..."

In this case, Dr. Harper's ten year relationship with the HMO was terminated "without cause" even though the termination was based on the recommendation of Healthsoure's clinical quality assurance committee. Apparently, the termination of Dr. Harper was actually based upon concerns about his compliance with the plan's practice guidelines or some related reason ("for cause"), but the plan chose to take the easy way out. The New Hampshire Supreme Court further held that, "...If a physician's relationship, however, is terminated without cause, and the physician believes that the decision to terminate was, in truth, made in bad faith or based upon some factor that would render the decision contrary to public policy, then the physician is entitled to review of the decision."

The decision in Harper, which allowed Dr. Harper to learn the specific reasons for his deselection, represents an important step forward. The court recognized the fact that HMOs and other payers may be hiding behind the "no cause" clause and deselecting providers for reasons that may be inappropriate, i.e., providing "too much" treatment for patients, even though there may be medical necessity for such treatment. Had the Healthsource agreement between the parties specified the economic criteria which might trigger deselection based on a small number of enrollees, or the potential that another qualified physician would be available to provide lower cost services, Dr. Harper would at least have received the information necessary to understand whether or not his termination was made in bad faith.

On April 30, 1997, a California court of appeal rendered a decision, in a case entitled Potvin v. Metropolitan Life Insurance Company, holding that physicians must be allowed fair procedure before insurance companies can remove them from the insurer's network of providers, even if the contract allows for a termination without cause. As is so often the case, although this termination was made pursuant to the "no cause" clause of the contract, the evidence showed that the insurance company had concerns about the physician's malpractice history. Even though the physician wrote to the insurance company and explained that a 1977 case had been settled without an admission of liability and that other claims of malpractice against him had been dropped, the insurer would not grant a hearing to the physician and insisted that they were not terminating him "for cause."

As a result of the physician's termination from the plan, he lost a large percentage of his patients. Additionally, as is sometimes the case when one is terminated from a plan, he was terminated by other managed care entities and rejected by physician groups. He also lost referrals from other physicians who were members of defendant's health care provider network.

The appellate court decision in this case emphasized the fact that California courts have long recognized a common law right to fair procedure protecting individuals from exclusion or expulsion from private organizations which control important economic interests. The decision referred to earlier California court decisions regarding managed care plans, where it was held that the common law right to fair procedures extends to health care providers' membership in provider networks because managed care plans control substantial economic interests. In this particular case, the court noted that Metropolitan Life controlled substantial economic interests affecting Dr. Potvin, since about fifteen percent of his patients were insured by Metropolitan.

This case may be appealed by Metropolitan (Ed. note: the case is now being appealed and is expected to be heard this summer).

It is important to note that neither of the two decisions discussed in this article clearly spell out the extent of the fair hearing or fair procedure requirements that are necessary in order to pass muster with the court. It is likely, in this writer's opinion, that the courts will require nothing more than a clear and accurate statement of the reason for terminating a provider, and the right of the provider to submit a written response that must be considered by the plan.

While the threat of increased litigation in this area of managed care practice may compel some plans to re-evaluate these contractual provisions, we should not expect that the problems created by the "termination without cause" clause will quickly disappear. Managed care companies will continue to argue that such a clause is necessary for the smooth and efficient operation of provider panels, and that most plans do not misuse the clause.

Managed care companies will also argue that the requirement of a fair hearing or procedure, if applied too widely, will lead to an increase in costs, which will ultimately have to be paid by the employer. In fact, one managed care representative has asserted that the attack upon the "without cause termination" clause is a back door attempt to impose "any willing provider" rquirements on health plans.

On a note of caution, it must be remembered that a termination for cause can create problems for the practitioner vis a vis insurability, hospital privileges, and utilization by other payers. As the "without cause" clause is used less frequently, "for cause" terminations may increase. If these terminations are upheld, after notice and a fair hearing, the negative consequences described above may follow. The likelihood of increased litigation seems obvious, since practitioners will claim that the "for cause" termination was made in bad faith, or was capricious, or was simply not appropriate under the circumstances.

LAWSUITS AGAINST MANAGED CARE
Summer, 1998

California Psychological Association has contracted with a law firm in Los Angeles and is moving forward with a lawsuit against a major health plan (to be named publicly once the suit is filed) for wrongfully denying mental health benefits to consumers. The suit may make it possible to expose the internal workings of managed care companies as well as to win an important judgment. Preliminary fundraising has begun to raise money for the costs of the suit. CCEMHC has pledged a sizable donation and hopes that many of you will make donations of your own.

Meanwhile, the anti-trust class-action suit spearheaded by New York attorney Joseph Sahid was dismissed by U.S. District Judge Kimba Wood in late April. The suit alleged price-fixing and other anti-competitive practices by nine managed care companies. The judge based her decision on lack of sufficient evidence. Mr. Sahid has appealed the case to the Second Circuit Court of Appeals.

LAWSUITS PROLIFERATING
December, 1998

California Psychological Association Sues Aetna for False Advertising

(Ed. note: This information is taken from a press release by the California Psychological Association.)

On September 28, 1998, the California Psychological Association, with the support of the American Psychological Association, announced that it has filed a lawsuit in Los Angeles County Superior Court against Aetna/U.S. Healthcare of California, and its behavioral health contractors, Human Affairs International of California (HAI), and Adventist Health Behavioral Care. The suit alleges false advertising and unlawful business practices regarding mental health benefits in the Select Choice HMO health plan. Specifically, according to the suit, while the plan publicly says it offers up to fifty mental health outpatient visits per year, providers are told that only four to eight sessions will be covered. Providers who have asked for authorization for additional visits have been terminated from the network. Within the network, the plan appears to send most referrals to a small percentage of providers with low utilization rates.

Merit Sued in Texas Over Patient's Suicide

On October 19, 1998, a suit was filed in Fort Worth, Texas, against Merit Behavioral Care, subcontracted with NYLCare, an HMO recently purchased by Aetna/U.S. Healthcare, for releasing a suicidal patient from the hospital over the objection of his psychiatrist. The 68-year-old man was discharged after one week in the hospital. He went home, drank half a gallon of antifreeze that night, and died eight days later. According to the man's psychiatrist, a psychiatrist working for Merit told him the patient had used up his benefits for hospital days, even though the coverage limit had not been reached.

Plaintiffs Prevail in Kentucky Suit Against Humana

On October 21, 1998, a woman in Kentucky was awarded $13 million by a jury because her HMO, Humana Health Plan, improperly denied coverage for a hysterectomy. The case, reported in Lawyers Weekly USA ("Cracks Appearing in HMO Armor; $13 Million Verdict Shows Depth of Public Animosity Toward Managed Care" by Hudson Sangree, November 30, 1998), set a precedent by awarding the huge punitive damages even though the woman suffered no lasting health consequences from the decision. A major factor in the jury's ruling was presentation of information about how the company made its decision to deny the woman's care. Humana had hired a Santa Monica (California) based company, Value Health Sciences (VHS), to evaluate the physician's request. VHS advertised that it saves its clients $38 million dollars on requests for hysterectomies. When Humana notified the woman's doctor of its decision, the reviewer informed the woman's doctor that the surgery wasn't medically necessary. The decision is contradicted by National Cancer Institute standards. A tape recording of a telephone argument between the patient's doctor and the physician working as Humana's reviewer was played for the jury, which increased jurors' sympathy for the plaintiff. The jurors were also appalled when they were told that Humana paid its reviewers bonuses for denying claims.

ERISA often prevents suits against health plans for punitive damages. However, ERISA did not apply in this case because the woman received her health insurance through her husband's work as a public employee, and ERISA only applies to persons insured by private employers. Attorney Mark Hiepler estimates that for this reason, nearly 30% of the U.S. population is NOT restricted by the ERISA shield.

Virginia Psychologists Suing Blue Cross/Blue Shield

The American Psychological Association has also joined the Virginia Academy of Clinical Psychologists in a suit filed December 11, 1998, against Blue Cross/Blue Shield of the National Capital Area and its HMO subsidiary, CapitalCare. Also listed as defendants are the contracted companies who administer the mental health benefits: Value Behavioral Health, ValueOptions, and Health Management Strategies International. Six psychologists and two patients filed the complaint, stating that the defendants acted in ways that prevented patients from accessing the benefits they had been promised. For instance, a year ago the plans threatened to terminate providers who refused to accept a drastic reduction in pay, which resulted in greatly reducing the size of its provider network.

Texas Attorney General Sues Six HMOs

On December 16, 1998, Dan Morales, the Attorney General of Texas, announced he has filed lawsuits against six HMOs, accusing them of penalizing doctors who do not limit patients' medical care and of illegally compensating those who did. The companies, Aetna/U.S. Healthcare, Humana Health Plan of Texas, Pacificare of Texas, Aetna Health Plans of North Texas, NYLCare Health Plans of the Southwest, and NYLCare Health Plans of the Gulf Coast, were also accused of giving patients deceptive information about coverages and misrepresenting the timeliness of handling claims. An Aetna spokesman called the allegations "preposterous," while one from Humana said Texas regulators were well aware of the HMOs' contracts and had approved them.

Pennsylvania Court Narrows Interpretations of ERISA

State courts continue to wrestle with how broadly the ERISA preemption of state laws for employer-based health plans should apply. In December, the Pennsylvania Supreme Court issued a decision in favor of a plaintiff against an HMO, U.S. Healthcare (Pappas v. Asbel, No. J-97-1997, Pa S. Ct. Dec. 23, 1998). In its opinion, the court noted that when Congress passed the ERISA law, it did not intend to preempt state laws which govern the provision of safe medical care. Thus claims that an HMO has been negligent by providing covered medical benefits in such a dilatory fashion (i.e., deliberately delaying care) that the patient is injured should not be dismissed because of ERISA preemption. The state court decision is not binding on other states but has "persuasive authority" outside Pennsylvania.

Spring, 1999
$120 MILLION VERDICT AGAINST HMO SETS RECORD

On January 20, 1999, a jury in San Bernadino awarded record punitive damages to the plaintiff in a case brought against Aetna U.S. Healthcare, the nation’s largest health insurer, by Teresa Goodrich, whose husband, 44-year-old David Goodrich, died from a rare form of stomach cancer in 1995. In addition to $4.5 million awarded for medical expenses and loss of companionship, the jury awarded $116 million in punitive damages for the company’s “malice, oppression and fraud” in delaying and denying approval for appropriate treatment. The company is appealing the decision. The federal ERISA law that would have blocked any punitive damages in many lawsuits did not apply in this case because David Goodrich was a government employee.

Spring, 1999
CALIFORNIA PSYCHOLOGICAL ASSOCIATION SUIT PROCEEDS

CPA’s lawsuit against Aetna/U.S. Healthcare for false advertising of its mental health benefit has survived an attempt by the defendant to have the suit dismissed. Aetna took the case to federal court and tried to invoke the ERISA preemption, which would protect the health plan from accountability to state law. The judge overruled Aetna, and the case is back in state court. Now the discovery process, in which witnesses are deposed and documents are examined, has begun.

Spring, 1999
]SUPREME COURT ALLOWS RACKETEERING SUITS AGAINST INSURERS

In a landmark decision on January 20 (Humana Inc. v. Forsyth, 97-303), the U.S. Supreme Court ruled that the federal RICO law (the Racketeer Influenced and Corrupt Organizations Act of 1970) could be used by consumers to sue insurers for triple damages for fraud. Until now, most courts have ruled that insurers are governed by state regulation and are immune from lawsuits based on federal statutes. The case involved policyholders of Humana, Inc., who alleged a scheme by the company to get secret discounts on hospital billings while patients were still responsible for paying their usual percentage of the undiscounted hospital bills. Most individuals who want to sue their insurer are not likely to benefit from the decision, but more class-action suits and larger monetary judgments are expected as a result.

Spring, 1999
KAISER SUED FOR FALSE ADVERTISING

The Foundation for Taxpayer and Consumer Rights, under the leadership of consumer activist Jamie Court, charged Kaiser Permanente with false advertising, in a lawsuit filed on March 16, 1999. According to the suit, Kaiser has spent $60 million a year on television and print ads that emphatically state that only doctors, not insurance administrators, make decisions about patient care at Kaiser. The slogan was “In the hands of doctors.”  The consumer group alleges that Kaiser physicians are under constant pressure to curtail medical costs. The company has reduced Kaiser’s medical budget, pushed doctors to reduce the number and length of hospitalizations, and tied physicians’ compensation to business quotas limiting patient expenses, according to the suit. The action was filed in State Superior Court in San Francisco on behalf of the nearly 500,000 members who joined the health plan from 1996 to 1998.

ERISA MATTERS

Summer, 1999
According to an article in the Orange County Register (Daniel Weintraub, “Tale of Aetna tape: Fear of suit a factor in health claim reviews,” October 25, 1998), a video tape of Aetna lawyers training claims managers about procedures for denying claims shows the insurer considers liability exposure in determining whether or not to pay a claim. ERISA-protected claims were to be separated from non-ERISA claims, where state laws apply. ERISA claims could be denied after only a cursory review, while non-ERISA claims were to be scrutinized more carefully.

LAWSUITS AGAINST AETNA PROCEEDING
Summer, 1999

The California Psychological Association’s lawsuit against Aetna/U.S. Healthcare and its contractors, HAI of California and Adventist Health Behavioral Care, is progressing. The suit, which accuses these companies of false advertising for selling more generous mental health benefits than they intend to provide, is in the discovery stage, where the plaintiffs present a list of exact questions that must be answered and specified documents the defendants must produce. Meanwhile, efforts by HAI and Adventist to be removed from the suit have failed, along with Aetna’s attempt to have the suit dismissed in federal court based on the ERISA preemption.

Aetna has also been sued under the federal anti-racketeering law (RICO) in U.S. District Court in Philadelphia on behalf of nearly six million people who enrolled or renewed their membership in Aetna from July, 1996, to the present. The class action suit is being conducted by the Foundation for Taxpayer and Consumer Rights, a Santa Monica consumer advocacy group. The plaintiffs claim Aetna advertises that it is dedicated to quality medical care, while in actuality the company encourages systematic cost cutting that undermines the quality of care.

The Foundation for Taxpayer and Consumer Rights, under the leadership of consumer activist Jamie Court, charged Kaiser Permanente with false advertising, in a lawsuit filed on March 16, 1999. According to the suit, Kaiser has spent $60 million a year on television and print ads that emphatically state that only doctors, not insurance administrators, make decisions about patient care at Kaiser. The slogan was “In the hands of doctors.”  The consumer group alleges that Kaiser physicians are under constant pressure to curtail medical costs. The company has reduced Kaiser’s medical budget, pushed doctors to reduce the number and length of hospitalizations, and tied physicians’ compensation to business quotas limiting patient expenses, according to the suit. The action was filed in State Superior Court in San Francisco on behalf of the nearly 500,000 members who joined the health plan from 1996 to 1998. 

The panel found the Kaiser hospital in Harbor City "fell beneath the standard of care" and that the insulin overdose was "a substantial contributing factor" in the death of 73-year-old Peter Lakos, the panel wrote in a decision dated Jan. 30.

Lakos, a Type 2 diabetic, was injected with 10 times the normal dose of insulin and went into respiratory arrest in 2005. He died about two weeks after the overdose, said attorney Raymond Paul Johnson, who represents the Lakos family.

""We'd like to express our sympathy to the family," said Kaiser spokesman Jim Anderson, who declined to comment further.

A three-day hearing was held last month with both sides giving oral and written testimony before an independent arbiter. Lakos' widow, Rose, testified that besides being overdosed, her husband developed bedsores due to lack of care, Johnson said.

The panel awarded Rose Lakos and her two sons $318,944.

Formerly at: http://www.mercurynews.com/news/ci_8187532?nclick_check=1