CareFirst, Green Spring sued over claim denial

Class action bid turns on rules disclosure

Health care

October 12, 1999|By M. William Salganik | M. William Salganik,SUN STAFF

Joining a growing trend toward class action litigation against HMOs, a Maryland woman is suing CareFirst BlueCross Blue-Shield and Green Spring Health Services, the mental health manager for Blue Cross, over refusal to pay a claim.

The plaintiff in the case, filed in U.S. District Court in Baltimore, is identified only as Jane Doe, a Maryland resident, in the court filing because of the "confidential and sensitive nature" of her case.

Her daughter, called Susan Doe in the filing, was treated at a mental health facility in New Jersey from April 30 to Sept. 18, 1996.

According to the complaint, Green Spring refused to pay for the treatment, claiming that it had not been medically necessary.

The suit charges Green Spring and CareFirst with violating the federal law governing employee benefits by setting up rules for coverage that were not told to members.

The suit is on behalf of Jane Doe, her daughter and CareFirst members as a class. David Sorensen and Peter Nordberg, Philadelphia attorneys representing Jane Doe, said they were not sure how many people might be included in the class or how large the damages might be.

Potential damages would involve unpaid claims or allegedly inflated premiums, but not "pain and suffering" or other damages in a typical malpractice case, Nordberg said.

Class action litigation has been on the rise against HMOs and other managed care insurance plans, and courts have been interpreting laws in a ways that have permitted more suits to proceed.

"The plaintiffs' bar in this subject area seems to be developing," said Christine Williams, a specialist in employee benefits law with the Baltimore firm Gordon, Feinblatt, Rothman, Hoffberger & Hollander. "They're getting more skilled in the technicalities, and more creative."

The spate of suits came because "the pile of dead bodies just got too big to ignore," said Dan Feinberg, an Oakland, Calif., attorney specializing in class action suits under the federal Employee Retirement Income Security Act (ERISA).

The HMO industry, on the other hand, argues that it is being "targeted" by aggressive lawyers.

"We believe these suits will be shown for what they are -- spurious charges being brought for the enrichment of the trial bar," said Susan Pisano, vice president of the American Association of Health Plans, the HMO trade association.

The Jane Doe case is representative of the trend in class action suits in that it alleges, in effect, that the insurers violated ERISA by not making the rules of coverage clear to members.

On Sept. 28, the U.S. Supreme Court agreed to review a case making a similar claim, involving failure to disclose to members of an Illinois HMO its incentives for doctors to reduce the costs of care. Also, by paying doctors to hold down costs, that case charges, the HMO creates a conflict of interest. That also violates ERISA, it is charged, which says those who give care must look out for the best interests of the patient.

In that case, the plaintiff suffered a burst appendix while waiting for treatment, causing costly additional care. In the Jane Doe case, in contrast, the patient received care; the issue is whether the insurer should have paid for her treatment.

The law being cited in the case the Supreme Court is reviewing and in the Jane Doe case -- ERISA -- has also, for years, made it difficult for patients to sue HMOs. In a round of cases in the early 1980s, Feinberg said, courts ruled that patients could not sue in state court because ERISA gave the federal government control over most benefit plans. But when they sued in federal court, he said, the courts said ERISA did not provide penalties for violations.

Recently, he said, lawyers have tried applying ERISA in new ways, and courts have been interpreting ERISA in a way that allows more cases to proceed.

Another major trend in litigation against HMOs, Feinberg said, is to argue that medical decisions denying care constitute malpractice.

Spokeswomen for both Green Spring, now part of Magellan Health Services of Columbia, and CareFirst said their companies would not comment on the pending litigation.

Sorensen and Nordberg said their firm, Berger & Montague, had handled complex class action cases in several areas, including tobacco, environmental and stockholder litigation.

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