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Read Making a Killing

home / healthcare / in the media

Associated Press
Apr 10, 1999

Court Allows Suit Against HMO

A federal appeals court has ruled that an HMO may be sued over the quality of health care in a case in Texas, the only state that has a law permitting such claims.
However, the ruling does not allow patients to sue because an HMO won't pay for a particular treatment.

The 5th U.S. Circuit Court of Appeals' ruling on Friday came in the case of Bridgett Giles, a Houston woman whose 9-year-old son, Alex, died after their doctor failed to detect an enlarged heart.

The ruling upholds a lower court judge who ordered the case sent back to state court.

The ruling apparently is the first time the 5th Circuit has allowed a patient's lawsuit against an HMO to be tried in state court. In three previous cases, the court determined that consumers had no remedy for harm allegedly committed by their health plan.

The federal law under which the company wanted the case to be heard does not allow injured parties to sue for damages.

''This is a big win for patients who have little leverage against their HMOs and now have a a new threat under their belt to sue if an HMO compromises quality,'' Jamie Court, director of Consumers for Quality Care, an advocacy group based in Santa Monica, Calif., told The Dallas Morning News.

''I know this is just one case, but it has a ripple effect to help other people,'' Ms. Giles told the newspaper. Her telephone number is unlisted and her lawyer did not return telephone calls to The Associated Press on Saturday.

Congress and at least 30 states are debating whether to give consumers the right to sue their HMOs for damages. The Texas law allowing malpractice lawsuits against HMOs was enacted in 1997.

Ms. Giles originally sued NYLCare in state court, saying the insurer failed to properly screen or supervise her son's doctor. NYLCare officials denied wrongdoing and moved the case to federal court, arguing that federal courts had jurisdiction under the federal Employee Retirement Income Security Act of 1974, known as ERISA.

The law governs employer-paid pension plans and health plans. It replaced traditional state legal claims such as malpractice and wrongful death with a set of rules that requires employees to pursue their claims in federal court. It does not allow injured parties to seek damages and limits awards to the cost of any benefits denied by the insurer.

However, the 5th Circuit ruled that health care is a traditional area of state law. And it said that even though NYLCare raises a federal law defense under ERISA, it can argue that in state court.

There was no comment Saturday from NYLCare. An operator at the company's switchboard in Dallas said no one would be available for comment until Monday.



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