TAKING IT TO COURT

July 13, 1999
		Senators continue debate over patients' rights, including whether patients should be able to sue their HMO's. Margaret Warner talks with Chip Kahn of the Health Insurance Association of America and Connie Barron of the Texas Medical Association about a patient's bill of rights and the liability issue. The Health Unit is a partnership with the Henry J. Kaiser Family Foundation.

A Health Spotlight Report: Patients' Bill of Rights July 13, 1999: A background report on patients' rights. July 8, 1999: An Alzheimer's vaccine? Remaking Medicare June 24, 1999: Should doctors unionize? June 7, 1999: Mental Health Conference July 20, 1998: Three patients' rights bills. July 1998: Forum: Should the government manage care? July 9, 1998: Debating managed care The NewsHour's Health Spotlight. Browse the NewsHour's coverage of Health   Health Insurance Association of America Texas Medical Association The Democrats' 'Patients' Bill of Rights The Republican Patients' Bill of Rights Plus Families USA American Association Of Health Plans The Business Roundtable	MARGARET WARNER: A major point of contention in this Senate fight is over whether patients can sue their HMO's or health insurance companies. Under current law known as ERISA a patient may sue his health care plan only in federal court and only to recover the cost of the treatment that was unfairly denied. The Democrats' bill would let patients sue their managed care provider in state courts for compensatory and punitive damages if the plan's treatment decisions cause injury or death. The Republican bill would leave current law in place. For more we're joined by Chip Kahn, president of the Health Insurance Association of America, which represents the nation's leading health insurance companies, and Connie Barron, associate director of legislative affairs for the Texas Medical Association. A 1997 Texas law gives patients there the right to sue their health plans. Welcome to you both. Ms. Barron, why should patients be able to sue their health care plans?
	Should HMO's be liable?
	CONNIE BARRON: Under current law, as you mentioned, Margaret, today if a health plan makes a life or death treatment decision, the only thing that a patient is able to recover is the cost of the benefit denied, so if the psychiatrist says that I have a patient that is suicidal and I have to have him stay in the hospital for another 48 hours to stabilize him on medication, the health plan overrules that request by the psychiatrist and says they don't think it's medically necessary and sends him home, the patient commits suicide, the survivors can recover the cost of that two-day stay in the hospital. There's no incentive for health plans to do the right thing and to be very careful when they're making these decisions to make sure that they're looking carefully at each patient and making the right decision in that case. MARGARET WARNER: Chip Kahn, why shouldn't a health insurance company be liable for damages if a situation like that occurs? CHIP KAHN: Well, I think situations like that shouldn't be settled in court; they should be settled when the situation arises and good health plans today are providing appeal mechanisms when there are questions like this. The last thing we want is to hand this kind of issue over to the trial bar. That's not going to be good for either the patient or the country. MARGARET WARNER: Can this be settled some other way, without the right to sue? CONNIE BARRON: The right to sue is the enforcement mechanism. Chip presents it in a way as if it's an either/or situation. The question that one has to ask themself is you can put into place an appeals process, but if the plan doesn't abide -- and yes, good plans will -- but they're not all good plans, and if I don't abide by that appeals process, then what, so what? What's my incentive? CHIP KAHN: The irony here is that the doctors are the first to complain about the faults of our tort system. They've been for malpractice reform for years, and here we're saying, no, we should throw a whole new set of issues into the courts, and all I can say is that's not good for the consumer, and at the end of the day it will cost money. I should add that we're not just talking about health plans being liable here. The Kennedy bill also exposes employers, and that's going to increase costs, and that's going to scare employers away from providing coverage for their employees. MARGARET WARNER: All right. I want to get to the employer's point, but let me stay with you, Mr. Kahn, for a minute. Doctors, as you said, are liable now if they make a treatment decision and that decision is the wrong decision, or it leads to injury or death. Yet, if they're overridden by an insurance company, the insurance company can't be liable. Explain why that should be. CHIP KAHN: Well, the insurance company or the health plan is making a decision as to what is covered benefits. The doctor's responsible for the care, the doctor is responsible for the services. That's separate from what's covered by the health plan. CONNIE BARRON: It absolutely cannot be separate. The benefits are based upon medical necessity, and what that says is that in order to know what is and is not covered, I'm going to wait until the situation presents itself, and I'm going to look at that patient, at that point in time, and they're saying -- the insurance company -- I, the insurance company, am going to look at that patient, and I'm going to make a medical determination about what is medically appropriate, and then that leads to what is covered. You can't say the old saying, we never deny treatment; we only deny payment. When you deny payment ahead of time, it results in someone not getting the treatment. CHIP KAHN: Well, my argument is whenever there's a contentious point, it can get settled by appeals. The fact is that 97 percent of claims are paid, 3 percent of claims are thrown into some kinds of appeals, and a half of those are ultimately paid. So I think the issue here is a very narrow one, though the fear mongers seem to be wanting to press on HMO's and other kinds of health plans and it's unfortunate, because it's going to hurt the consumer over time.
	The employer's perspective
	MARGARET WARNER: Mr. Kahn, let me ask you about something you raised about the employer, because when I read the analysis I guess done by the Congressional Research Service, it said that there was a specific exemption, that unless the employer was actually making treatment decisions, they were specifically exempt. Explain how the employers are exposed here. CHIP KAHN: Well, if this is a self-insured plan and in some cases the employers actually do administer the plan -- in other cases, they may contract with an HMO or other kind of health plan to administer the plan, itself -- I can promise you when this gets to court, they're going to find a way to get back into the employers, particularly in self-insured situations, the employers, I think, under this bill are responsible. But that's the reason the employers are raising such Cain about this legislation, because they see it as placing them at risk. MARGARET WARNER: A lot of the big employer groups are opposed to this bill. Is that why? Do you think they have a reasonable fear of being exposed here? CONNIE BARRON: We do not agree that that's a reasonable fear. We think that if they're not -- if an employer is not making that specific treatment decision, that the language makes that clear, but the interesting thing is that employers have been asked repeatedly, bring us the language. Nobody wants to sue employers; nobody's trying to sue employers. We're looking at health plans that are making individual case specific treatment decisions. If employers are doing that, then we would hope they would exercise ordinary care in evaluating those cases as well. But we don't believe that's happening, and if the language isn't clear at this point to make that clear, bring us the language. CHIP KAHN: Well, first, the language isn't clear, and second, we're not just talking about treatment; we're talking about all aspects of administration of health plans, and clearly, the employers are involved there, and I can promise you the trial bar is aiming their guns at employers, as well as health plans. MARGARET WARNER: All right. Mr. Kahn, explain -- you've mentioned costs now -- the larger costs. What is your estimate of what this provision would cost? CHIP KAHN: Well, the Congressional Budget Office has costed it at about 1.4 percent increase in premiums -- MARGARET WARNER: Per year, is that right? CHIP KAHN: Per year. Other studies have shown up to 6 percent, but I think what -- MARGARET WARNER: Excuse me. Can I interrupt you for a second? Is that -- I thought that was all provisions of this bill. What about just this right to sue-- CHIP KAHN: The larger number was a Baron's study that looked at liability. The Congressional Budget Office has scored this, I believe, at 1.4 percent. But the important thing here is it's not just the cost, which is significant. It also is if you place employers at risk, it is going to scare many employers who are voluntarily providing health insurance away from providing that health insurance. I've heard many industrial leaders say that if this legislation is passed, they will drop their health insurance. This has tremendous implications for many Americans and is just an example of why this is bad policy. CONNIE BARRON: I think we'll have to agree to disagree. I don't believe that employers are going to drop coverage. We've had -- as Margaret mentioned earlier -- a liability bill in Texas for almost two years; we've had no decrease in coverage, no increase in premiums. The same threats were posed there. Nothing's happened. Show me an employer -- CHIP KAHN: This has -- MARGARET WARNER: Let her finish. What has happened, though? I mean, how many lawsuits have been filed? CONNIE BARRON: We have at this point two lawsuits and possibly a third in over two years. And there were cases where the appeals process that had been in place was not followed by the plan. CHIP KAHN: This is apples and oranges. The law in Texas is not the same as the Kennedy bill. The Kennedy bill makes employers liable and also covers all aspects of insurance, not just treatment. In a sense, the Texas bill is simply a malpractice bill. This goes way beyond treatment, believe me.
	The size of insurance premiums
	MARGARET WARNER: Ms. Barron, certainly when people look at medical malpractice, and you see some of these huge judgments, and doctors have seen their insurance premiums go sky high, why wouldn't that happen also in the case of health insurance companies and HMO's? CONNIE BARRON: Well, I think the most important thing to keep in mind is that people don't want to sue their HMO's; they want the care that they believe they paid for, and in many cases did, and they want to believe that even if they don't get the care that they were treated fairly in making a decision as to whether that care was or was not provided. And that's why looking at the idea of an appeal is wonderful. And if you have the appeal, in most cases the care will, one, either be provided or, two, the individual is going to feel they were treated fairly with an independent review if the care is withheld. And, I'm sorry, but no self-respecting trial lawyer is going to put forth the money involved to bring a complex case like this if a managed care plan has done everything reasonable and acted the way they should in leading to making a decision about withholding treatment. CHIP KAHN: I'm sorry - MARGARET WARNER: Mr. Kahn, let me ask you, though, -- it's really the nub of it, which has to do with the quality of care. Will this -- could this improve the quality of care, though, eliminate situations where, in fact, treatment is unfairly denied? CHIP KAHN: Quite the contrary. I think this will place a chilling effect on managed care, on the ability of insurance companies and health plans to work with their providers regarding coverage and services, and this is the wrong way to go. This is only a piece of an entire bill of rights or so-called bill of rights, which is the wrong way to go. But clearly this is the worst aspect of the legislation. MARGARET WARNER: But, I'm sorry, when you said it would not improve the quality of care, why not? CHIP KAHN: Well, if anything, it's going to lead to less coverage because as it increases cost, employers are going to drop coverage. And, second, it's going to set the trial bar on health plans and employers, and that's not going to improve quality. That's simply going to increase cost. MARGARET WARNER: All right. Well, thank you both very much.