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Compliance July 10, 2002
US High Court Won't Disturb Ct. HMO Suit Ruling
October 7, 2002 (PLANSPONSOR.com) - 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.
Reported by Fred Schneyer
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.