Judge limits federal protections for managed-care company

In a court order that sets an important legal precedent, a D.C. Federal District Court judge ruled that a managed-care company cannot hide behind a federal law to protect itself from being sued by patients and psychologists. APA is hailing the judge's decision as a victory for patients and their providers.

The court order stems from a lawsuit filed by the Virginia Academy of Clinical Psychologists (VACP) and a patient against Blue Cross/Blue Shield of the National Capital Area (BCBSNCA), its subsidiary Capital Care Inc., and its subcontractors. The suit charges that the defendants misrepresented their services and withheld patient treatment to increase profits.

For example, according to the suit, the defendants falsely represented to employers and subscribers that the health-maintenance organization (HMO) plan would provide a large panel of psychologists who are encouraged to provide appropriate treatment in up to 20, and in some cases up to 52, sessions per year. Instead, the defendants routinely pressured the psychologists to deliver treatment in 10 or fewer sessions.

APA is supporting the case, hoping it will expose the degree to which managed-care companies make treatment decisions and place too much emphasis on cost-cutting measures and profits.

The District Court order denied the managed-care company's claim that it can't be sued in a state court because it's protected by the 1974 Employee Retirement Income Security Act (ERISA). This federal law effectively prevents employees in health plans covered by ERISA from bringing claims of managed-care negligence to state courts.

Many health-care providers and consumer groups have argued that ERISA--originally intended to protect pension assets--has become a shield that protects health plans from state laws.

"The courts are increasingly skeptical of managed care's strategy of hiding behind the ERISA shield as protection from negligent health-care decision-making," says Russ Newman, PhD, JD, APA's executive director for practice.

The case was originally filed in the District of Columbia Superior Court, but the defendants removed it to a federal court, claiming that they were protected by ERISA. The defendants had consented to return the case to the state court before the court order was signed.

Now the order should prevent the defendants from trying to remove the case in the future.

--L. Rabasca



Read our privacy statement and Terms of Use

Cover Page for this Issue

PsychNET®
© 1999 American Psychological Association

APA Home Page . Search . Site Map