Managed Care Abuse & Insurance Company Misconduct

Managed care organizations (MCOs) and health insurance companies frequently make decisions impacting upon the quality of medical care. Holding MCOs and insurance companies accountable under the current law for injuries caused by their wrongful conduct calls for innovative thinking. The lawyers of Williamson & Lavecchia are focused on developing ways for the victims of managed care abuse and wrongful conduct by health insurers to recover compensation from MCOs and health insurers.

An HMO or Health Maintenance Organization is a pre-paid health plan that consists of an association of health care professionals and facilities. Members of an HMO choose a primary care physician (PCP) from a limited list of physicians who coordinates their care. The PCP determines how, when, and where you will be treated as well as what hospitals or specialists you may see. The HMO provides strong financial incentives to the PCP to minimize the amount of health care provided to the patient.

PPO stands for Preferred Provider Organization which consists of a group of health care professionals who provide care to a specified group of patients. Patients in a PPO typically have greater choice in selecting care providers than they would have in an HMO. Unlike most HMOs, the patient often has the right to obtain services outside of the list of providers, but the patient may pay a higher fee.

Capitation is a method of compensating a physician employed by HMOs. The physician receives a flat preset amount per patient per month. The physician receives the same amount whether they see the patient once or many times. All too often this structure results in the rationing of medical care in order to reap higher profits for the physician and the HMO.
Some HMOs give doctors incentives and bonuses for not ordering tests or referring patients to specialists.

Another cost saving method employed by health insurers is the utilization review process where nurses retained by the insurer oversee health care decisions. In some cases a nurse may refuse to cover treatment or a referral to a specialist even if your physician has determined that it is medically necessary.

The Paradox of ERISA

ERISA stands for the Employee Retirement Income Security Act of 1974. ERISA governs most employee benefits including health benefits. While ERISA was originally intended to protect employee rights, it has adversely affected employees' rights to quality health care by limiting damages to the delivery of benefits. Under ERISA you have the right to sue for benefits wrongfully denied and you may be able to collect attorney's fees for the cost of your suit. You may also sue for a declaratory judgment to clarify your rights to future benefits. However, many courts have found if an insurance company wrongfully determines that you do not require a certain treatment like an MRI, psychiatric care, or a referral to a specialist, the insurer is not liable for your injuries even if you can prove that the insurer negligently caused your injuries. In many cases this has meant that injured patients and families who have lost loved ones due to an insurer's negligent denial of medical care have no remedy. However, some attorneys have successfully obtained a recovery for their clients through innovative legal theories.

If you are employed by the government or through a church health plan you may be excluded from ERISA pre-emption and you may have broader remedies than if you are insured through other types of employment. It is important to let an attorney review your policy and your employment situation to determine your rights.

Your insurance policy may impose deadlines for appealing the denial of benefits. You are strongly encouraged to consult an attorney knowledgeable in managed care liability to review your policy and to advise you on appealing the denial of benefits. If you are not successful on appeal, your attorney can advise you on whether you should file a lawsuit to compel the insurance company to provide benefits under the policy. Under ERISA you may be able to recover your attorney's fees.

Many patients have suffered severe injuries and some patients have died because their insurance company refused to refer them to a specialist or denied medically necessary treatment. If you believe you have been injured or have lost a loved one because an insurance company denied treatment you should contact an attorney immediately. If you delay the statute of limitations may forever bar your claim. Your attorney will investigate whether you are insured through an ERISA plan. Remember not all health plans are covered by ERISA. If you are insured through an ERISA plan you need an attorney knowledgeable about ERISA and the evolving legal theories to successfully recover for your injuries or the loss of a loved one.

To learn about possible strategies for holding MCOs and insurers accountable please read the article "Piercing the Armor: Approaches to Managed Care Liability", a paper authored by the lawyers of Williamson & Lavecchia L.C., which can be found in our Cyber Library.

Library for Managed Care Abuse & Insurance Company Misconduct:

• Managed Care Liability-An Update On ERISA Case Law-Jan. [PDF]   
  Description: Update on developments in the law concerning the legal liability of managed care organizations (also called Health Maintenance Organizations HMOs)
• Piercing the Armor: Approaches to Managed Care Liability. [PDF]   
  Description: A paper presented by Tom Williamson at the 1999 Virginia Trial Lawyers Convention to help lawyers in fighting for persons harmed by the misconduct of HMOs and other managed care organizations.

Frequent Questions for Managed Care Abuse & Insurance Company Misconduct:

• What is an HMO?
• What is a PPO and how does it differ from an HMO?
• What is capitation and how might it affect the care I receive from my primary care physician?
• Are there other HMO restrictions or incentives for doctors to ration health care?
• What is utilization review?
• What is ERISA and how does it relate to my health insurance?
• What plans are excluded from ERISA preemption?
• What should I do if I have been denied treatment under my health plan?
• What are my legal rights if I have been injured because my insurance company wrongfully denied medical treatment?