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Reaching Compromise on HMO Legal Accountability


February 2000
Government Relations
Practice Directorate
For more information: Pracgovt@apa.org


Managed care reform conferees should support the House-passed legal accountability provision. Only this provision ensures that patients are afforded a remedy for their injury. If the Goss-Coburn-Shadegg accountability provision is to be considered a reasonable compromise, it must be improved. The Goss-Coburn-Shadegg provision does not yet offer a reasonable compromise because within it:

  • The "substantial harm" requirement excludes mental health injuries. Unlike the House-passed accountability measure, the Goss-Coburn-Shadegg provision bars patients, who have been injured by the negligent denial or delivery of their mental health treatment, from any legal recourse. Through its definition of "substantial harm," the Goss-Coburn-Shadegg provision allows only patients with physical injuries to seek remedy.

Patients can and do suffer devastating mental health diagnoses, including major depression, phobias, and posttraumatic stress syndrome, which have no "physical" component. If their managed health plan negligently treats or denies covered treatment, they can experience personal injury, become debilitated, lose their jobs, suffer with their family, just as anyone with a physical injury. These patients should not be barred from legal recourse. Rather, the conferees should adopt other procedural provisions, such as strong internal and external appeals procedures and reasonable judicial procedural limitations to prevent frivolous lawsuits.

  • The noneconomic damages cap potentially leaves children and stay-at-home parents without adequate recourse. The Goss-Coburn-Shadegg accountability provision caps noneconomic damages. Injured children and stay-at-home parents rely on noneconomic damages for adequate recourse because they have virtually no economic damages. The Goss-Coburn-Shadegg noneconomic damages cap leaves them with no or very low damages, even for devastating injury. The final accountability provision should not cap noneconomic damages. Rather, the final accountability provision could protect employers and health plans from exposure to potentially outrageous jury damages awards through reasonable compromises that include punitive damages caps and that permit separate proceedings to determine whether punitive damages should be awarded.

  • Patients have no recourse for the negligent delivery of care. Patients are injured through both the negligent delivery of care and the denial of care. The Goss-Coburn-Shadegg accountability provision permits recourse only for the negligent denial of care and therefore fails to recognize that patients can be injured through the negligent delivery of care. For example, managed health plans negligently deliver care through procedures that lead to a misdiagnosis or which unduly delay treatment. The final accountability provision should recognize both types of negligence.

  • Patients are denied court access after adverse external review. Patients should not, as in the Goss-Coburn-Shadegg provision, be barred from any relief under the legal accountability provision merely because an external appeal reviewer agrees with an HMO's treatment decision or benefits' denial. An external appeal reviewer can make mistakes too and should not act as a court of law to determine causation or injury. Rather, a rebuttable presumption could be provided for or courts could be required to give substantial weight to the final external review decision, thus affording an additional barrier against frivolous actions.

  • While employers should be protected from legal actions, employers are inappropriately shielded from accountability for actions that directly impact patient care. The final accountability provision should protect employers that do not make final decisions about patient care from legal actions for the negligence of the HMO in delivering or denying health care to their employees. The final provision should specify employer actions that do not constitute final decisions about patient care, such as an employer's selection of a health plan, changes in benefits coverage, or intervention on behalf of a particular employee with the health plan. An employer, however, which specifies medical necessity procedure that causes negligent injury, or that directs an agent who makes a negligent denial or treatment decision, should not, as in Goss-Coburn-Shadegg, be protected for such decisions, which in fact directly impact final decisions about care.


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