By Congressman Charlie Norwood
September 14, 1999
The U.S. Senate in July passed a package of managed care reform measures in a storm of bitter partisan controversy.  Senate Republicans called the Patients’ Bill of Rights a responsible reform effort that would give patients in managed care plans new rights, without driving up the cost of health insurance.   Senate Democrats called it a sham that didn’t go far enough, and would leave patients without adequate legal protections against unscrupulous HMO’s. 

They’re both right.  The Senate bill did indeed address many of the key issues facing patients, but omitted the single issue that will ultimately spell success or failure for the reform effort.  That is the ability of patients to hold health insurance companies accountable for medical decision-making and breach of contract.    

Regardless of the merits of faults of the Senate-passed bill, it is still a massive victory for patients, simply because it passed.   Last year, the managed care lobbyists blocked all action in the Senate.   The House can pass the greatest bill in the world,  but if the Senate fails to follow suit,  nothing happens.  In 1998 that was the case, but as a result of this watered-down bill being approved, we are already past the Senate roadblock. 

There are two conditions that must be met in order for a bill to become law this year.  One, a final bill must include a restoration of the legal rights of patients taken away by the Employee Retirement Income Security Act of 1974.  Two, the solution must have the support of an overwhelming majority of the House from both parties.  

There is one bill that meets this test - The Bipartisan Consensus Managed Care Improvement  Act of 1999, H.R. 2723. 

The Consensus Bill accomplishes the goal by establishing liability as the final line of defense in coordinated levels of patient protections, beginning with the first time a patient is denied a benefit. 

Before injury from lack of care occurs, patients have free access to an external appeals panel, which is required to issue legally binding decisions within 78 hours.  If plans don’t follow the decision, patients can sue in federal court for $1000 a day penalty for every day care is denied, plus court costs and attorney fees.  

If the health plan explicitly follows federal law in providing access to the panel and adheres to the board’s decision, they remain immune from punitive damages, but are still liable for compensatory damages, including economic damages, pain, and suffering.   

However, the bill does not prevent a patient from skipping the numerous protections and proceeding directly to state court if they are damaged before the appeals process can be completed or  requested.  

The new liability language also expressly defines what constitutes, and who faces liability to begin with:  

If health plans simply provide the care requested by the patient and their doctor, they cannot be sued for any reason.  

Plans cannot be sued for denying benefits that are expressly not covered by the plan.  If a health plan states in their contract that a given procedure is specifically not covered, trial attorneys cannot file suits that claim it should have been.  

Employers cannot be held liable for their decisions to purchase specific plans or benefits - regardless of the track record or actions of the health plan, or the lack of treatment benefits.    
Employers remain immune from liability unless they directly exercise discretionary authority in making medical decisions against a patient’s treatment request.   Even if the employer has the authority to overrule a health plan decision, they can choose to render no decision and remain shielded from all liability.

The Consensus Bill provides the strongest clarifying language possible on the "discretionary authority" issue.  If employers choose not to use their discretionary authority to weigh in on a disputed treatment, but instead choose to let the external appeals process work to completion, they remain immune.   

The new ERISA liability provision brings to Congress what members have been looking for in the way of solutions.  Under this bill, someone with real injuries from plans that ignore the law have full access to all damages allowed in state court.  If bad plans continue improperly denying benefits, and dragging their heels on patient appeals, they face compensatory and punitive damages with no federal limitations on the award.  

However, if the insurer gives the patient what they want, they remain immune.  If they contest a treatment, but follow the standards in the bill, they won’t face punitive damages regardless of the outcome.  That’s a powerful economic incentive to follow the new standards to the letter of the law.  If plans do that, we won’t have patients being injured to begin with.

What this bill really accomplishes is precisely what the American public wanted from day one on this issue - relief for the truly injured against the truly negligent.


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