US High Court Won't Disturb Ct. HMO Suit Ruling

October 7, 2002 ( - The US Supreme Court Monday let stand a lower court decision that blocked the state of Connecticut from suing a health maintenance organization over its use of a drug formulary.

The 1999 suit was brought by Connecticut against Physicians Health Services of Connecticut Inc because the state felt Physicians Health Services “had caused its enrollees to go without medically necessary prescription drugs,” according to a Dow Jones news report.

Connecticut brought the suit on behalf of state residents who receive health insurance benefits under ERISA. However a Connecticut federal judge and the US 2 nd Circuit Court of Appeals said federal law didn’t permit such a suit from a state.

Like many HMOs, Physicians Health requires that doctors seek prior approval before prescribing drugs that aren’t on a formulary list.

The case, which Physicians Health called unprecedented, has caught the attention of the HMO industry as it faces numerous actions by states seeking to alter industry practices.

Physicians Health is a unit of Health Net Inc., Woodland Hills, Calif.