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Jury's Huge Award in HMO Case Renews Debate on Patients' Rights

California and the West

Health care: The $120-million judgment against Aetna may force the industry to examine its policies and fuel the drive to let more patients sue.

January 22, 1999|JULIE MARQUIS | TIMES STAFF WRITER

The stinging $120-million verdict by a San Bernardino County jury against Aetna U.S. Health Care of California may force introspection among HMOs nationwide and heat up the debate over patients' rights to sue them, attorneys, legislators and experts said Thursday.

"This will move the whole debate [over HMO accountability] back on the front burner," Robert Blendon, a Harvard University health policy expert, said of Wednesday's verdict. "It's going to alarm the public more. . . . But on the other side it's going to mobilize the employer community," which fears that such large verdicts--though rare--could push up premiums.

The record-breaking judgment against the subsidiary of the nation's largest managed-care organization crystallizes public outrage against HMOs, and could force insurers to consider internal reforms--if only to save money and avoid more drastic legislative action, experts and consumer advocates said.

"The beauty of it is that a verdict like this can actually change industry practices," said Jamie Court, director of Consumers for Quality Care, a group pushing for managed care reform.

The Wednesday verdict resulted from the lawsuit of a Yucaipa schoolteacher whose husband, a deputy district attorney, died of a rare and fast-moving stomach cancer. The widow, Teresa Goodrich, claimed that Aetna repeatedly denied or delayed approval for David Goodrich's care in the 2 1/2 years before he died, forcing him to seek unauthorized treatment outside Aetna's network.

Aetna officials say they did nothing wrong and have vowed to "vigorously appeal" the case.

"We feel great sympathy for Mrs. Goodrich's loss," Tom Williams, president of Aetna U.S. Health Care of California, said Thursday. "The loss of her husband is unfortunate, but when you look at all the facts, we believe that we acted fairly. Obviously, the jury didn't agree."

Even some industry insiders acknowledge that the case is a warning to companies to review their grievance procedures and the information they provide to patients about their rights. The Goodriches, for example, were never informed that Aetna had an "exclusion" for experimental procedures, their lawyer said.

"HMOs should have very well-defined and well-developed grievance procedures that afford their members the ability to have due process," said Janet Craig, a Kentucky health care attorney who represents HMOs and who is former general counsel in that state's Department of Insurance. "If they don't have these procedures, these cases [of big awards] should serve as a wake-up call."

Williams said Aetna had the kinds of grievance procedures Craig is referring to at the time the case arose but that the Goodriches did not use them.

As for whether the company would do some soul-searching in the wake of the verdict, he said Aetna already made substantial changes following another large verdict in 1993--when the family of Nelene Fox, who died of breast cancer, won an $89.3-million award from Health Net in Riverside County.

But Williams said the company will continue to consider changes. "Any opportunity that we have to evaluate ourselves, we do it," he said. He cited the company's recent decision to allow its members access to external review by independent physicians.

Craig and many others in the managed care industry say litigation and large awards can be avoided if solid grievance procedures, including external review, are implemented and followed.

The hottest debate will probably involve expanding consumers' right to sue. The Goodrich case--and another $13.1-million verdict against Humana Health Plan in Kentucky--point up what some consider a huge disparity in consumers' right to legal redress.

The only reason Teresa Goodrich could obtain substantial damages from Aetna is that her husband, a public employee, was exempt from a federal law that keeps most consumers with employer-based insurance from taking their insurers to court.

The greatest fear of many insurers--and employers--is that changes in the federal law, known as ERISA, will cause lawsuits such as Goodrich's to multiply--increasing the cost of health care and eroding profits. Many Republicans in Congress argue that the true beneficiary of such changes would be trial lawyers. With some exceptions, the Republicans tend to favor external review.

But patients' attorneys and several Democratic legislators say lawsuits--or the threat of them--is the most effective way to keep profit-seeking insurers from denying patients necessary care to save money.

"The whole purpose of punitive damages in this [Goodrich] case and in others is to stop this egregious conduct which leads to these awards in the first place," said William Shernoff, whose firm represented Teresa Goodrich. "If this company [Aetna] and others will heed the message, there will be no more of these cases."

Some Democratic legislators expressed hope that the Goodrich case would give a boost to managed-care reform legislation.

"I think it will be enormously helpful," said U.S. Rep. John D. Dingell (D-Mich.), co-sponsor of the House "patients' rights" bill and the ranking Democrat on the Commerce Committee, "not just with [the bill] but also with the HMOs who need some assistance in developing a ripe conscience."

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