HMOs claim immunity from malpractice They say law shields them in employee plan cases


WASHINGTON -- Health maintenance organizations, which care for more than 60 million people, are telling courts across the country that they cannot be held responsible for medical malpractice in cases involving patients who receive care through an employer-sponsored health plan.

The HMOs argue that they are protected against malpractice claims and lawsuits by a 1974 federal law that regulates employee benefits.

But Labor Secretary Robert Reich, who enforces the federal law, called that argument absurd, saying that it would deprive many consumers of the right to sue for injuries caused by the negligence of their HMOs.

In the past three years, the federal government has filed friend-of-the-court briefs in a half-dozen malpractice cases against HMOs. In an interview, Reich said the administration was considering legislative proposals to clarify the rights of workers and their dependents who receive care through HMOs.

"The situation has to be corrected," Reich said. "If the courts won't do it, Congress must."

The issue is enormously important for consumers. Unlike insurance companies that underwrite fee-for-service plans, HMOs can exert vast influence over a patient's care by setting guidelines for treatment or limiting access to medical specialists.

And yet in many cases, HMOs contend that they cannot be held legally accountable for the quality of care because they do not make medical decisions.

The issue has considerable effect on doctors as well. In many cases, patients who sue HMOs also sue the doctors.

Carol L. O'Brien, a lawyer at the American Medical Association, said, "HMOs are shifting virtually all of the risk of patient care to physicians, even though the HMOs can force doctors to change their clinical decisions by threatening to terminate their contracts."

Courts have split on the issue, depending on the details of each case.

HMOs such as U.S. Healthcare, Kaiser Permanente, Prudential and Pacificare have asserted in court that malpractice claims against them are pre-empted by the 1974 law, the Employee Retirement Income Security Act, or ERISA. If a malpractice claim is pre-empted, it cannot be pursued and must be dismissed.

G. William Scott, a senior trial lawyer at the Labor Department, said: "This is the defense that HMOs are raising for everything now. Whenever they are sued, they say, 'We have no liability because we were administering an employee benefit plan.' "

Pub Date: 11/17/96

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