Court order could limit protections for managed-care companies

If a Virginia psychologists' association is granted the court order it seeks, managed-care companies could face increased legal accountability for negligent treatment decisions.

The court order stems from a case in which the Virginia Academy of Clinical Psychologists (VACP) and a patient are suing Blue Cross/Blue Shield of the National Capital Area (BCBSNCA), its subsidiary Capital Care, Inc., and its subcontractors, charging that they misrepresented their services and withheld patient treatment to increase profits.

APA is supporting the case hoping that it will set a legal precedent that would curb managed-care companies' ability to usurp practitioners' authority to provide care or interfere with patient care by placing too much emphasis on cost-cutting measures and profits.

The case was filed in the District of Columbia Superior Court and removed to a federal court by the defendants. VACP has asked D.C. District Court Judge H. Greene to sign an order that would return the case to a state court. The managed-care company moved the case to a federal court because it says it is protected by the 1974 Employee Retirement Income Security Act (ERISA), which effectively prevents employees in health plans covered by this federal law from bringing claims of managed-care negligence in state courts.

Essentially, if the judge signs the order, APA and VACP hope to set a precedent that would help prevent managed-care companies from hiding behind the ERISA shield.

The U.S. Department of Labor, which oversees interpretation and enforcement of ERISA, filed an amicus brief in support of VACP's position. According to the brief, the lawsuit belongs in the state court because ERISA doesn't apply in a traditional breach of contract case. The intent of ERISA is to protect employers from being sued by their employees over employee benefits. In this case, the plaintiffs are suing the managed-care company and its subsidiaries and subcontractors for their failure to deliver the services they promised, the brief says.

The defendants have now consented to return the case to the state court. However, in their agreement, they warn that they will request to again remove the case to a federal court if the plaintiffs bring up issues that are protected by ERISA, such as a claim against the employer who provided the health benefits. VACP has asked Judge Greene to sign an order that states ERISA doesn't apply in this case to prevent the defendants from removing the case in the future.

At press time, the judge hadn't yet signed the order.

--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