WASHINGTON - The day after Ruby Calad's hysterectomy in Texas in 1999, a nurse working for her health insurer informed Calad that Cigna Corp. wouldn't pay for another day's hospital stay even though her doctor believed more care was needed.
"I've never seen any doctor swear in front of me and be so mad," recounted Calad, a mother of two daughters from Sugarland, Texas, who continues to require surgery because she didn't heal properly. "I said, `I can't even walk,' but he was throwing all my clothes out of my little cubby and putting them in my suitcase. I was heavily medicated, in a dream-like state, and I'm thinking, `This can't be happening.'"
Her case, heard by the Supreme Court yesterday, demonstrated the growing tension between health care cost control and patient rights.
Health maintenance organizations make lots of decisions about patient care, but in most states they aren't held legally accountable if something goes wrong.
The Calad case, combined with the case of another Texas patient, could change all of that by establishing the right of patients to sue their HMO in state courts.
Advocates on both sides said the case is a landmark in deciding the course of managed care. It drew attention and court briefs from numerous patient and industry groups, including the AARP and the national Chamber of Commerce. The potency of HMO regulation as a political issue was also in evidence as advocates and elected officials, including Democratic Sen. Edward M. Kennedy of Massachusetts, gathered outside the court to comment afterward.
A key argument to be resolved is whether an HMO's decision to pay for services is, in effect, a medical decision, potentially subject to malpractice rules in state courts, or an administrative one.
Miguel A. Estrada, a lawyer representing the health insurers Cigna Corp. and Aetna Inc., argued that the insurers are not making medical decisions but rather deciding whether a service is covered.
"The plan's role is to deal with the question of, `Should we pay or should we not pay?'" he told the justices. HMO decisions are administrative and about "coverage," he said, making them subject to review in federal court, but not a state court.
The distinction is significant because it could involve millions of dollars. In federal court, patients can recover the cost of the service if they win - for example, the cost of a day's hospital care in Calad's case - but can't collect for damages, as they could in state malpractice cases.
The other patient in the case is Juan Davila, a 51-year-old Denton, Texas, man who works for a burglar alarm company. His doctor prescribed Vioxx, a common, expensive arthritis drug. His insurer, Aetna, said he should first use a generic drug, naprosyn, which is less expensive but causes stomach problems in some patients. Davila began to suffer bleeding ulcers and had to be rushed to the emergency room in July 2000 after a near heart attack that his suit contends resulted from the naprosyn substitution.
George Parker Young, the lawyer for Calad and Davila, argued in court that the health plans' decisions aren't merely about payment.
"The [HMO] nurse says, `You've got to go home now,'" he said.
Calad, 49, who had to return to the hospital several days after her initial release, said she continues to suffer and is scheduled for more corrective surgery this summer.
The Calad and Davila cases are at the crossroads of HMO efforts to rein in cost and patient complaints about shortcuts in health coverage.
"This will probably turn out to be the biggest factor in helping to prevent cavalier denials of needed health care by HMOs and other managed health care plans," said Ron Pollack of Families USA. The consumer group filed a friend-of-the-court brief in the case with more than a dozen other advocacy groups.
Insurers, however, counter that giving patients the potential to sue in 50 states would add to medical costs and make health insurance less affordable.
"It would create a very uncertain climate and uncertain environment for the strategies our members follow to try to keep costs under control. It would turn every dispute into litigation," said Karen Ignagni, president of America's Health Insurance Plans, the main trade association for HMOs and other health insurers.
HMOs date to the Great Depression, when concern arose over the ability of people to pay medical bills. The industrialist Henry Kaiser was a pioneer, hiring doctors to treat his employees.
Doctors preferred self-employment. Medical societies and hospital associations launched and promoted Blue Cross and Blue Shield plans, so-called indemnity insurance in which the insurer paid for pretty much whatever the doctor ordered, subject to deductibles and co-payments. That remained the dominant form of health coverage until the late 1980s.