Supremes To Weigh In On HMO Review

The justices agreed to decide the issue after conflicting appeals court rulings in Illinois and Texas, despite the urging of the Justice Department to stay out of the dispute while Congress considers federal legislation that would require independent reviews in similar cases.

The Supreme Court said it would decide the case from Illinois (Rush Prudential HMO v. Moran) while holding another from Texas. However, at least 37 states and the District of Columbia carry laws on the books that require health maintenance organizations to provide some form of independent review of benefit denials.

Illinois Case

Debra C. Moran sued her HMO to recover $94,841 she paid for surgery to correct the pain, numbness and decreased mobility she suffered from a shoulder problem in 1996. She had also consulted, at her own expense, the opinion of a surgeon outside the network.

The HMO’s physicians concurred in the diagnosis, but recommended a less-complicated and less-costly surgical procedure. The HMO refused to honor Moran’s request for an independent review of their decision until ordered to do so by an Illinois court. The HMO then refused to pay, even after that independent reviewing physician said Ms. Moran should receive the more-expensive treatment.

Two Rush-affiliated thoracic surgeons confirmed the diagnosis but recommended a standard, less-complicated procedure. Moran filed suit in an Illinois state court when the HMO didn’t act on her request for an independent review. In the meantime, she opted to undergo the more-complicated surgery.

The case was moved to federal court, which sided with the HMO, ruling that the suit was pre-empted by ERISA. On review, the Seventh US Circuit Court of Appeals in Chicago reversed the decision and allowed Ms. Moran’s suit to proceed. That court found that the Illinois independent-review provision was a state law regulating insurance and, as such, wasn’t pre-empted by ERISA.

Texas Case

A US appeals court in New Orleans had ruled that the Employee Retirement Income Security Act (ERISA) and the Federal Employees Health Benefits Act of 1959 preempted the independent review process established under state law. That Texas law was adopted in 1997 when President Bush was governor of Texas.

The Texas patients’ bill of rights provided for independent, physician review of health maintenance (HMO) and preferred provider organizations (PPO), where care recommended by an attending physician was deemed not to be medically necessary. The Texas law had been challenged in court by four Aetna subsidiaries, according to Reuters.

– Nevin Adams                   editors@plansponsor.com