In a pro-HMO decision, the US supreme court handed down a unanimous verdict denying a patient the right to sue her HMO in federal court for denying her needed medical tests. In a candid decision, Justice Souter flatly stated that HMO care is rationed care, mandated by Congress to hold down costs. However, legal pundits say that HMOs will face many cases in state courts, rather than federal courts.
Patient's rights groups were disappointed with the decision and have stepped up the call for a comprehensive patient's bill or rights.
The court's decision in Pegram vs.
Herdrich, 98-1949, potentially affects some
160 million people covered under
H.M.O.'s. The justices reversed a ruling by
the United States Court of Appeals for the Seventh Circuit, which had
decided in favor of the patient, Cynthia Herdrich, and against a clinic
doctor, Lori Pegram, in a case from Illinois.
In 1991, Ms. Herdrich's appendix burst during an eight-day wait for a
test to diagnose her abdominal pain. Dr. Pegram had told her she had to
wait for an ultrasound examination to be performed by Health Alliance
Medical Plans of Urbana, Ill.
Ms. Herdrich contracted peritonitis, and her medical situation became far
more complicated than it would have been had she had a routine
appendectomy. She sued and won $35,000 in a malpractice suit under
Illinois state law.
Then Ms. Herdrich sought further relief in the federal courts, arguing that
she ought to be able to collect damages under the 1974 Employee
Retirement Income Security Act, or Erisa. That federal law was passed
largely in response to pension abuses, though it also governs
employer-sponsored health plans.
Ms. Herdrich argued that the H.M.O. that covered her, Carle Care, had
failed in its fiduciary duty to her by not acting solely in the interest of
participants and beneficiaries in the medical plan.
During the arguments, several justices suggested that Congress had
indeed meant to balance the benefits of individual patients against the
"health" of the medical system in general, or else why have H.M.O.'s in
the first place?
"Sometimes," Justice Ruth Bader Ginsburg said, "what's in the best
interest of a particular plaintiff could be against the interest of a class of
Justice David H. Souter went to the heart of
what some see as an inherent, still to be resolved conflict of interest
involving health maintenance organizations. "In an H.M.O. system, a
physician's financial interest lies in providing less care, not more," he
wrote. "The check on this influence (like that on the converse,
fee-for-service incentive) is the professional obligation to provide
covered services with a reasonable degree of skill and judgment in the
He added that "inducement to ration care goes to the very point of any
H.M.O. scheme, and rationing necessarily raises some risks while
reducing others (ruptured appendixes are more likely, unnecessary
appendectomies are less so...)"
Though today's ruling has broad implications, there are other issues
involving health maintenance organizations, their duties toward patients
and the rights of those patients that remain to be decided, both in the
courts and in federal and state legislatures.