High Court: Medicare Recipients Can Sue HMO

October 12, 2001 (PLANSPONSOR.com) - California Medicare recipients can sue their HMOs if they are wrongly denied necessary medical treatment, the US Supreme Court ruled as the justices tackled the thorny issue of state liability laws.

In their ruling this week, the justices refused to hear the HMO claim that the Medicare Act prevents state damage suits.

The court left intact a ruling by the California Supreme Court holding that managed care firms can be sued for damages if they are negligent or deceptive in caring for their patients.

Lung Transplant

The decision came in the case of George McCall who, suffering from a lung disease, was allegedly denied a chance by his HMO doctors to receive a lung transplant – until it was too late.

His widow sued the HMO, PacifiCare of California, and its doctors’ group, Greater Newport Physicians, after she learned her husband could have received a transplant paid for by Medicare had he not been enrolled in the HMO.

In their appeal, lawyers for the healthcare groups argued that the ruling would prove “dangerous and disruptive” if it were allowed to stand.

Trial Ahead

While the suit is now set to go to trial in March next year, the outcome does not affect employees who want to sue their HMOs.

Courts have said that separate federal law that governs pensions and employee benefits bars workers who receive health care as a benefit from suing for damages in state court.

Congress is reconsidering that question in the pending Patients Bill of Rights

Review Board

Medicare pays for health care for 39 million elderly and disabled persons.

Under the Medicare Act, those who are unhappy with their level of benefits must complain to a review board established by the federal agency that administers the program. They cannot go directly to court and sue for damages.

Over the last ten years, a growing number of Medicare recipients have contracted with HMOs to provide their medical care.

Until recently, it was unclear whether Medicare patients who were upset by their HMO could sue the managed care firm for damages, or whether they were barred from doing so by the Medicare Act itself.

In their May 3 decision, the state justices said Congress had not barred such lawsuits. Under traditional state liability law, consumers who are deceived by a company or are treated negligently are free to sue for damages.

– Camilla Klein                           editors@plansponsor.com

Read more at  Washington Insider: Track Patients Bill of Rights Legislation .