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Enact Legal Accountability in
Health Insurance Reform
Congress should enact legal accountability in managed health care reform to ensure that patients receive quality care, and that managed health plans are held accountable for their actions. The “Bipartisan Patient Protection Act of 2001,” (S. 283/H.R. 526) introduced by Senators McCain and Kennedy, and Representatives Ganske and Dingell contains this essential patient protection.
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Health Plan Legal Accountability. Congress should pass the McCain/Ganske “Bipartisan Patient Protection Act of 2001,” (S. 283/H.R. 526). The bill's accountability provision affords injured patients real recourse, while protecting employers from frivolous and inappropriate claims.
A legal “loophole” in ERISA continues to deny patients injured by the negligent health care decisions of their ERISA-regulated managed health plans the right to hold these plans legally accountable for their decisions. This loophole has allowed negligent managed health plans to avoid accountability and has removed an important incentive for encouraging the provision of high quality health care. Recent caselaw continues to demonstrate that Congressional action remains necessary to close the ERISA loophole. The Supreme Court case of Pegram v. Herdrich, 530 U.S. 211 (2000) only discussed, but did not decide, the question whether such managed care actions as denials of medical necessity can be challenged in state court or whether they are preempted by ERISA. Moreover, subsequent appellate and trial court decisions have interpreted Pegram as maintaining the ERISA preemption of negligence claims for damages against an HMO based on actions or omissions in determining entitlement to benefits, including determinations of medical necessity. Corporate Health Ins. v. Tex. Dept. of Ins., 215 F.3d 526 (5th Cir. 2000); and Schusteric v. United Healthcare Ins. Co. of Illinois, 2000 U.S. Dist. LEXIS 13021 (N.D. Ill. Aug. 31, 2000).
Compromise has been achieved in protecting employers from frivolous claims. The McCain/Ganske bill contains a strong internal and external appeals process, punitive damages limitations, and reasonable judicial procedural requirements to prevent frivolous actions, as well as an express exemption for employers who have not directly participated in a negligent decision regarding a particular claim.
Further compromise should not be reached at patient expense:
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A standard requiring “physical injury” should not be included as this standard bars from any legal recourse patients with mental health diagnoses who are injured by the negligent denial or delivery of their treatment. This provision excluding mental injury was in Senator Nickles' alternative that passed in the Senate on June 30, 2000.
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A noneconomic damages cap should not be included since children and stay-at-home parents, who have no or very low economic damages, may not be afforded adequate relief for potentially devastating injuries. This cap was included in the most recent House Republican compromise (H.R. 5628), which was introduced by Representatives Shadegg and Coburn late in the 106th Congress, and in Senator Nickles' alternative.
The cost of closing the ERISA loophole is quite low. According to the Congressional Budget Office, the legal accountability provision contained in the Norwood-Dingell bill (H.R. 2990), passed by the House in the 106th Congress, would have increased insurance premiums by only 1% (CBO, 2-10-00), which amounts to a mere penny per person per day.
April 2001
Government Relations
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