Aetna, Cigna Win at U.S. High Court on Patient Suits (Update6)
June 21 (Bloomberg) -- Patients can't sue health-maintenance organizations for refusing to pay for doctor-recommended treatments, the U.S. Supreme Court ruled, shielding Aetna Inc., Cigna Corp. and other insurers from the prospect of multimillion- dollar damage awards.

The justices voted 9-0 to block two Texas lawsuits, one that faulted Aetna for refusing to pay for a painkiller and one that said Cigna rushed a hysterectomy patient home from the hospital. The court said those suits are barred under a U.S. law that limits the liability of employer-sponsored benefit plans.

The ruling, which insulates insurers from damage claims by the 72 million Americans covered by HMO networks, comes four years after the court barred a different legal theory invoked by patients. Patients-rights advocates now will have to turn to Congress, where legislation to authorize suits has stalled.

``A regulatory vacuum exists,'' Justice Ruth Bader Ginsburg wrote, in a concurring opinion. She said that, while she agreed with the ruling, ``I also join the rising judicial chorus urging that Congress and this court revisit what is an unjust and increasingly tangled'' legal system for health-care claims.

The decision may thrust the issue into the presidential campaign. Democratic Senator John Kerry voted for legislation in 2001 that would have given patients a broad right to take their health insurers to court.

Republican President George W. Bush opposed that measure, saying it would have driven up health-care costs, and supported a scaled-back version. The legislative effort stalled when talks broke down between Senate Democrats and the White House.

Internal Bleeding

In a court filing, the Bush administration urged the Supreme Court to bar the Texas lawsuits.

``The president's opposition may have played a key role in today's decision,'' said Ron Pollack, executive director of Families USA, which filed a brief urging the high court to permit patient lawsuits.

In one of the disputes before the court, Aetna was sued by Juan Davila, who said he suffered internal bleeding and permanent harm after the HMO insisted he try a less-expensive pain medicine than Vioxx, which his doctor had prescribed.

In the other case, Cigna sought to end a lawsuit by Ruby Calad, who said she was sent home from the hospital too soon after her hysterectomy and later had to go to the emergency room. Calad said a Cigna representative overruled her doctor's recommendation that she needed to spend more than two days in the hospital.

Aetna and Cigna argued that damage suits are barred by a 1974 federal law governing employee benefit programs, the Employee Retirement Income Security Act, or ERISA. The companies said that under ERISA patients, using an administrative procedure, can seek payment from insurers only for the benefits they were denied, not for any pain and suffering they endured as a result.

`Eligibility Decisions'

The patients said their suits were akin to traditional state- court malpractice complaints against doctors, which the high court previously said are permissible under ERISA.

Justice Clarence Thomas, writing the opinion for the court, agreed with the insurers.

Thomas said the HMOs were making ``pure eligibility decisions'' and weren't acting as treating physicians. He also said the patients ``could have paid for the treatment themselves and then sought reimbursement.''

Aetna said in a statement that the ruling reaffirms that ERISA lays out the exclusive means for patients to resolve disputes with their insurers. ERISA ``has helped employers provide consistent, affordable health benefits to their employees,'' Aetna said.

Calad and Davila's attorney, George Parker Young, said the decision ``provides the HMOs with another tool to be used against the millions of workers and their families covered by ERISA.''

HMOs aim to control costs by requiring patients to go to certain doctors and get a referral before receiving care from a specialist.

Texas Law

Aetna and Cigna are the third- and fourth-largest U.S. health insurers respectively, behind No. 1 UnitedHealth Group Inc. and No. 2 WellPoint Health Networks Inc. Aetna shares fell 96 cents to $84.69 at 2:33 p.m. in New York Stock Exchange trading. Cigna fell $1.79 to $67.36.

Both lawsuits invoked a Texas law that authorized lawsuits when HMOs failed to provide ``ordinary care.'' As governor of Texas, Bush voiced objections to the measure but chose not to veto it, instead letting it become law without his signature.

About 40 to 50 suits have been filed against the managed-care networks in Texas in the past seven years, according to a lawyer for the patients. One jury awarded $13 million, although that amount was reduced on appeal.

Texas is one of 10 states with HMO liability laws. In other states, patients have sued HMOs under judge-made ``common law.''

Focus on Congress

``This will jump-start interest in the issue,'' said Sally Greenberg, senior counsel for Consumers Union, which supported the Texas law. ``There's been a consensus that care has been wrongfully denied by HMOs and that patients ought to have some recourse. This is a wake-up call for Congress now.''

Representative Charles Norwood, a Georgia Republican who has a been a leading advocate for a patient-rights bill, vowed to redouble his efforts. He called the ruling ``a blow to patients' rights.''

Health insurers and employer trade groups have fought to limit patient-rights legislation in Congress. Many of those groups hailed today's decision.

``It is critical employers feel confident that ordinary benefits decisions will not subject them to the extreme costs associated with often unlimited remedies under many state laws,'' said James A. Klein, president of the American Benefits Council, which represents corporations on pension issues.

The cases are Aetna Health v. Davila, 02-1845, and Cigna HealthCare of Texas v. Calad, 03-83.

To contact the reporter on this story:
Greg Stohr in Washington at  gstohr@bloomberg.net.

To contact the editor responsible for this story:
Glenn Hall at  ghall@bloomberg.net.