A bill aiding HMOs pushed

Legislative leaders seek measure after court refund ruling

March 24, 2000|By Timothy B. Wheeler | Timothy B. Wheeler,SUN STAFF

At the behest of Maryland's health maintenance organizations, General Assembly leaders are pressing for a hastily drafted bill to negate a ruling by the state's highest court that could force HMOs to refund millions of dollars to some members.

The bill, introduced in the session's closing weeks, would restore the authority of HMOs to collect money from members hurt in accidents who later receive payments from lawsuits filed over their injuries. The Court of Appeals ruled March 10 that state law does not permit the longstanding HMO practice.

House Speaker Casper R. Taylor Jr. and Senate President Thomas V. Mike Miller appeared yesterday before a joint legislative hearing to urge prompt action to correct a mistake they said the court made. If allowed to stand, they said, health care costs will go up even faster, costing all Marylanders.

"This bill would codify what many of us thought was the law all along," said Taylor, an Allegany County Democrat. He said lawmakers assumed for years that HMOs have the right to demand reimbursement for treatment provided injured members when someone else was at fault for the accident.

Lobbyists for the state's doctors, dentists and trial lawyers said the Assembly is being asked to bail out a powerful industry at the expense of Maryland consumers. They argued that HMOs have been collecting twice for health care they had been paid to provide.

"Really, they're double-dipping," said Bruce M. Plaxen, a Columbia lawyer who helped bring the case that resulted in the Court of Appeals ruling. "The HMO has been paid once for these medical services, and now they're looking to get paid a second time." Plaxen said he and other lawyers who worked on the case, Victor G. Riemer et al vs. Columbia Medical Plan, hope to convert it into a class action lawsuit seeking refunds on behalf of all the HMO's members who have been forced to pay portions of the insurance settlements they received for injuries suffered in accidents.

HMO spokesmen say they were stunned by the decision. They assumed that they had always been permitted to "subrogate," or put liens on court settlements or awards members get from personal-injury suits. The practice is common in the case of automobile accidents, where HMOs demand reimbursement for treatment they provided their members out of any settlements they get.

Other health insurers have always had that right, they note.

"The insurer who paid the bills is entitled to recover from the person who caused the harm," said D. Robert Enten, lobbyist for the state's Association of Health Plans, which includes HMOs. But the appeals court said the General Assembly did not authorize subrogation for HMOs when it passed legislation 25 years ago setting up the prepaid health plans.

HMOs collect $15 million to $20 million a year from subrogation, Enten said. If the court ruling is left untouched, he said, the industry could be required to repay as much as $500 million collected since HMOs began in 1975. "The court in this case quite frankly went way beyond what anyone thought was the law," he said.

Opponents challenged the HMO figures, and argued that the court's decision was neither radical nor unexpected. They also contended that the HMO industry had ample notice of its precarious legal posture. A Howard County Circuit judge denied subrogation five years ago, they said.

Daniel Clements, speaking for the Maryland Trial Lawyers Association, disputed HMOs' contention that they would be devastated by the decision. "Maybe CareFirst won't make $70 million next year," he said referring to the HMO's recently reported annual profit. "Maybe they'll make $55 million."

Critics also complained that the legislation would apply retroactively, wiping out pending claims in the case that the Court of Appeals ruled on. The Maryland Bar Association, among others, argued that it is bad public policy to apply legislation into the past.

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