Managing Managed Care

Know your rights when dealing with an HMO

Published in 2006 Florida Super Lawyers — June 2006

In 2000, Edward Ricci of Palm Beach Gardens won a landmark $79.5 million verdict against Humana Health Insurance Company of Florida Inc., one of the nation’s largest health maintenance organizations. In 1995, Humana decided to boost profits by abruptly cutting off care for more than 100 catastrophically ill people, including 5-year-old Caitlyn Chipps, a Palm Beach County girl with cerebral palsy who needs crucial occupational, physical and speech therapy. Hearing about Chipps compelled Ricci to step in.
 
“This was a fascinating case where Humana had hired one of the big accounting firms to do a review of their business to see if they could improve their profits,” explains Ricci of Ricci-Leopold, whose peers named a Super Lawyer. “The accounting firm recommended that in Florida and Washington, if [Humana] stopped providing coverage to catastrophically ill children, its profits could go up by $79.5 million a year.”
 
The Chipps family successfully sued in state court. Poetic justice prevailed when the court awarded the family the amount of extra profit Humana stood to earn by ending care for catastrophically ill patients; it was the secondlargest judgment in U.S. history against an HMO.
 
When Humana appealed, the judge threw out the verdict due to technicalities, according to Ricci, and the parties reached a confidential settlement. The compelling case inspired a 2002 TV movie, Damaged Care, starring Laura Dern as real-life whistleblower Dr. Linda Peeno, a former medical reviewer for Humana who testified for the plaintiffs.
 
Unfortunately, the Chipps case is significant in that it proves a sobering point about consumer rights — or the lack thereof — regarding HMOs in Florida: Patients have few avenues available if their HMO denies them care. “In general, the laws are designed to protect insurance companies, doctors and HMOs,” says Spencer Marc Aronfeld of Aronfeld Trial Lawyers in Coral Gables. The law does nothing to protect injured patients, he says. “People don’t know that until they become the victims of negligence.”
 
In the Humana case, Ricci could sue for damages on behalf of the family because the girl’s father, Mark Chipps, worked as a police officer for the Palm Beach County Sheriff’s Department. Therefore, his health insurance plan was not governed by the federal Employee Retirement Income Security Act, which would have made Humana exempt from a state court lawsuit. However, the vast majority of American employer benefit plans are subject to ERISA — and thus shielded from state lawsuits.
 
“The whole thing with ERISA, if you’re receiving benefits from the benefits department of a company and you work for a private company, you can only sue for the benefit and nothing else,” Ricci says. “Because the law treads on state rights, it cannot be applied to employees of state and local governments. If this had been an ERISA case, all we could have done was sue for compensation, and they would have had to start giving her the treatments again.”
 
According to Andrew Needle of Needle Gallagher & Ellenberg of Miami, under Florida law, companies may only be held liable for the actions of their employees. So if a physician who contracts with an HMO denies care, you may be able to take action against the doctor, but not the HMO. “You have to prove that even though the doctor wasn’t a salaried employee, he or she is acting as an agent of the HMO –– that’s very difficult to overcome,” Aronfeld says. “The times I’ve been successful in [battling] an HMO was when they had their own clinics where they employed doctors as salaried employees. They’ve wised up to that.”
 
That’s not to say you have no recourse with a managed care company. In fact, any time an HMO issues a final decision that a major procedure isn’t “medically necessary,” you should get a second opinion, according to John “Jack” Scarola of Searcy Denney Scarola Barnhart & Shipley in West Palm Beach. “Denials on a basis of medical necessity are often phony excuses,” he says.
 
But even if an attorney believes you have a solid case, prohibitively high legal costs may prevent you from taking action. Whether or not you prevail in the case, it’s highly unlikely you will recoup the legal fees. “It’s extremely difficult, other than for someone who’s wealthy, to bring a claim,” Ricci says. “I brought the Chipps case initially as a pro bono case. It turned out through discovery to be one amazing eye-opener.”
 
The state’s arbitration system even protects the managed care company by capping punitive damages at $250,000. “It seems like the worst malpractice that is committed, the more protection is afforded the institutions,” Aronfeld says.
 
A managed care company’s bottom-line attitude can impact not only patients: Doctors may have to fight to be fairly compensated for their services. Scarola has been successful in representing doctors faced with “no-pay” or “slow-pay” situations, where an insurer will not reimburse the physician after he or she has provided medical care, will delay payment by repeatedly requesting additional information, or will reduce reimbursement by bundling multiple services together under one payment code. What’s more, managed care companies in Florida are increasingly insisting on arbitration clauses in contracts with physicians to prevent or place barriers to lawsuits.
 
“They employ the same tactics to wear down the doctors that they employ to wear down the insured,” Scarola says. “HMOs recognize that a doctor is in the business of practicing medicine and that suing is an enormous distraction.” Many physicians have neither the time nor the staff to pursue the claims. “They’ll start off with a great deal of initiative in the beginning, and they get worn down,” Scarola says.
 
Because Florida law already favors managed care companies, it’s unlikely the climate will change anytime soon. The Legislature is considering a bill that would take away the right of the insurance commissioner’s office to pre-approve rate increases, which, if approved, would further limit the insurance commissioner from protecting consumers. “From my standpoint, I view Florida as having a very anti-consumer climate,” says Needle. “A serious patient bill of rights has been rejected by the Legislature, and where the Florida Supreme Court has made inroads in allowing patients to sue managed care companies, the Florida Legislature has taken that away by statute.”
 
The good news is that if you can afford to hire an attorney, juries are usually receptive to cases involving HMOs, unlike standard medical malpractice or personal injury cases in which juries tend to be biased against the plaintiff, according to Scarola. “I think the general attitude among most people is that HMOs are in the business of finding ways to deny claims,” he says. As a result, jurors tend to be more open-minded.
 
Ricci, whose Chipps case is often cited as an important consumer victory, says people shouldn’t lose hope of having their day in court. “I hope eventually to get an administration in Washington and state legislatures who realize ... when the founding fathers drafted the Constitution, they weren’t talking about the rights of corporations, but the rights of, by and for the people.”
 
 
If You Suspect an HMO is Denying You Care:
 
Become your own advocate: Research treatments online or at your local library so you can approach the HMO with hard evidence. Don’t be afraid to question a doctor or HMO employee’s authority just because you don’t have a formal medical background.
 
Establish a paper trail: If speaking by phone with an HMO, keep a record in writing of each call. Wherever possible, correspond with the HMO by e-mail, letter or fax and keep a record of each contact.
 
Get a second opinion: If you believe you need a test or a certain treatment and your doctor or HMO disagrees, consult another physician (with or without a referral) and request the diagnosis in writing.
 
Get a legal opinion: If your doctor or HMO refuses care because it’s not “medically necessary” and you have a diagnosis to the contrary, it may be time to consult an attorney.
 
Don’t give up: As with any bureaucracy, the HMO system can test your patience. Be persistent and stay the course.

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