MANAGED
CARE LIABILITY TO CONSUMERS OF HEALTH CARE (CONTUNUED)
VIII.
RECENT MEDICAL MALPRACTICE CASES AGAINST PLANS – SUCCESSFUL IF OVER QUALITY OF
BENEFITS
Dukes
Dukes
established that under certain circumstances, managed care could be sued for medical
malpractice, either directly or vicariously. As a result, in numerous jurisdictions,
managed care plans have been held subject to (1) vicarious liability claims on the
basis of respondeat superior or ostensible agency and (2) direct
liability based on (a) the negligent selection or control of health care
providers and (b) independent acts such as negligent utilization management.
See Raglin v. HMO Ill., Inc., 230 Ill. App. 3d 642, 646, 595 N.E.2d 153, 156
(1st Dist. 1992); Dunn v. Praiss, 139 N.J. 564, 569, 656 A.2d 413, 415-16
(1995).
IX.
PLAN HELD LIABLE FOR PROVIDER MALPRACTICE UNDER RESPONDEAT SUPERIOR
The respondeat
superior theory was used to alleged plan liability for its provider’s malpractice in Rice
v. Panchal, M.D., 65 F. 3d 637 (7th Cir. 1995). Mr. Rice brought an action
against two doctors for medical malpractice and against the health plan administrator,
Prudential, under a state law theory of respondeat superior. A federal district court
dismissed Rice’s complaint against Prudential on the grounds that he had no remedy
under ERISA. Rice appealed, arguing that there was no federal jurisdiction because his
state law claim was not subject to complete preemption by ERISA. The appeals court
reversed the district court, ruling that Rice’s claim against Prudential did not rest
upon the terms of an ERISA plan, and could be resolved without interpreting an ERISA plan.
Therefore, according to the appeals court, Rice’s claim was not properly
re-characterized as a suit to enforce his rights under the terms of a plan that is within
the scope of Section 502(a)(1)(B) of ERISA, and the claim was not preempted under Section
502(a). Thus, the appeals court concluded that Rice’s claim did not present a federal
question, and therefore, his case was improperly removed to federal court.
In Moscovitch
v. DanBury Hospital, the court held there was no ERISA preemption where the
Plan’s decision regarding the level of care needed resulted in the patient’s
suicide. Plaintiff alleged his adolescent son committed suicide because of the plan’s
decision to treat him in a drug treatment program rather than in an in-patient hospital
facility. The court found against ERISA preemption, noting the plaintiff was not alleging
the plan was making wrong decisions about whether certain care would be covered, but
whether the decisions made by plan with respect to the quality and appropriate level of
care and treatment for the decadent were appropriate.
A court has
also held there was no ERISA preemption where the plaintiff’ plan was alleged to be
vicariously liable for the malpractice of its physicians in failing to diagnose
Hodgkin’s disease. In Eaccarino v. Canlas, M.D. et al, the plaintiff sued her
physicians for misdiagnosing her for Hodgkin’s Disease and refusing to refer her to a
specialist. She also sued U.S. Healthcare, alleging the defendant physicians were the
authorized or ostensible agents of U.S. Healthcare and that U.S. Healthcare should be held
liable for their malpractice pursuant to established principles of vicarious liability.
The court granted the plaintiff’s motion for remand, ruling that her claims fell
outside the scope of ERISA because they raised quality of care issues, and did not concern
U.S. Healthcare’s refusal to provide or pay for benefits due under the plan.
In Diane
Miller v. Riddle Memorial Hospital, the plaintiff was discharged to her home rather
than to a skilled nursing facility following back surgery. She later had a stroke.
Plaintiff sued her physicians and U.S. Healthcare for medical malpractice. Upon removal,
the court remanded the case to state court, saying the case attacked the quality of the
benefits provided, not the quantity of benefits received:
"Plaintiff
does not contend that her alleged injuries are due to Healthcare’s failure to provide
or pay for any such benefits under the plan. Instead, the Complaint is replete with
allegations that the quality of medical care Plaintiff received was inadequate and with
allegations that Healthcare should be held liable for such inadequacies under agency,
ostensible agency and negligence principles. …Since complete preemption, and hence
removal jurisdiction, is absent where an ERISA plan beneficiary or participant challenges
the soundness of a medical decision made during the course of treatment, rather than the
administrative denial of a medical benefit due under a plan, there is no complete
preemption in this case."
Id. at
*5.
In Moreno v.
Health Partners Health Plan, plaintiff Moreno brought a medical malpractice suit
against Health Partners Health Plan and Dr. Luis Aguilar in state court. The plaintiff
alleged that Health Partners was both directly liable for its own negligence and
vicariously liable for the negligence of the physician-defendant. Health Partners removed
the action to federal court, arguing that the state law malpractice claims were preempted
by ERISA and should therefore be dismissed. The U.S. District Court for Arizona denied
Health Partners’ motion to dismiss, finding that there was no relation between an
action for medical malpractice and the recovery of benefits or the clarification of rights
to future benefits under an ERISA plan. As a result, the medical malpractice action was
not preempted by ERISA and the case was remanded to state court.
In Shannon
v. McNulty, 718 A.2d 828 (Pa. Super. 1998), Sheena Shannon, a member of HealthAmerica
HMO, periodically consulted with her treating physician and the HealthAmerica phone line
for what she believed might have been, but was told by her treating physician was not,
pre-termed labor. Periodically in October 1992, she complained over the phone of ever
increasing abdominal pain, back pain, and leg numbness. The HealthAmerica triage nurses
with whom she spoke referred her to her treating physician, without beneficial results,
and, later, to an in-house orthopedic physician who directed Ms. Shannon to West Penn
Hospital, an hour drive from Ms. Shannon’s home and past three hospitals along the
route. At West Penn, Ms. Shannon delivered a 1-½ pound baby who died two days later due
to severe prematurity. The plaintiffs’ expert claimed that
HealthAmerica, through its
triage nurses, deviated from the standard of care by not immediately referring Ms. Shannon
to a physician or hospital for a cervical exam and fetal stress test and that, had the
standard of care been followed, Ms. Shannon’s pre-term labor would have been
detected, thus increasing the baby’s chances of survival.
The Court
reversed a non-suit for HealthAmerica. It found sufficient evidence to establish
HealthAmerica’s vicarious liability for the alleged negligence of its triage nurses.
It concluded that HealthAmerica provided medical services in the form of telephonic advice
and that the adequacy of the services and the reasonableness of Ms. Shannon’s use of
the services were questions for the jury.
As to direct
negligence, the court held that there was sufficient evidence on the question of whether
HealthAmerica breached its duty to oversee all persons who practice medicine under its
auspices. On this issue, it stated as follows:
"[W]e
recognize the central role played by HMOs in the total heath care of its subscribers. A
great deal of today’s healthcare is channeled through HMOs with the subscribers being
given little or no say so in the stewardship of their case. Specifically, while these
providers do not practice medicine, they do involve themselves daily in decisions
affecting their subscriber’s medical care. These decisions may, among others, limit
the length of hospital stays, restrict the use of specialists, prohibit or limit post
hospital care, restrict access to therapy, or prevent rendering of emergency room care.
While all of these efforts are for the laudatory purpose of containing health care costs,
when decisions are made to limit a subscriber’s access to treatment, that decision
must pass the test of medical reasonableness. To hold otherwise would be to deny the true
effect of the provider’s action, namely, dictating and directing the
subscriber’s medical care."
"Where the
HMO is providing health care services rather than merely providing money to pay for
services their conduct should be subject to scrutiny. We see no reason why the duties
applicable to hospitals should not be equally applied to an HMO when that HMO is
performing the same or similar functions as a hospital. When a benefits provider, be it an
insurer or a managed care organization, interjects itself into the rendering of medical
decisions affecting a subscriber’s case it must do so in a medically reasonable
manner. Here, HealthAmerica provided a phone service for emergent care staffed by triage
nurses. Hence, it was under a duty to oversee that the dispensing of advice by those
nurses would be performed in a medically reasonable manner."
"718 A. 2d
at 835-836. Cf. Schleier v. Kaiser Foundation Health Plan of the Mid-Atlantic States,
Inc., 876 F.2d 174, 177 (D.C. Cir. 1989) (where the Court, while finding Kaiser
vicariously liable for a consultant’s negligence, took note that the plaintiff’s
husband "called the Kaiser advice nurse who responded that Smith would have to sweat
out his condition")."
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