Law & Medicine

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Imagine being a physician who has been involved in an adverse event—one that, through no real fault of your own, caused death or serious injury to a patient. Should your future patients have a right to know of your involvement?

Florida physicians are dealing with this issue in the wake of a recent decision by the Florida Supreme Court earlier this year, in Florida Hospital Waterman, Inc. etc., v. Teresa M. Buster, etc., et al. (No. SC06–912). In November 2004, Florida voters passed a constitutional amendment titled “Patients' Right to Know About Adverse Medical Incidents.” The amendment let patients obtain “any records made or received in the course of business by a health care facility or provider relating to any adverse medical incident”—as long as the identity of the patients involved in the incidents wasn't revealed, and other privacy restrictions were adhered to. This included incidents that had to be reported to a government agency, or those that were reported to health care facility review committees. The amendment was to become effective immediately.

About 6 months later, in June 2005, the Florida legislature tried to clarify the amendment legislatively, stating that existing restrictions on use of records in court cases stay in place and that “discovering such documents does not mean that any of them can be introduced into evidence in a lawsuit … and [they] may not be used for any purpose, including impeachment, in any civil or administrative action against a health care facility or health care provider.”

Because of the legislature's action, two lower courts in Florida were asked to decide whether the amendment passed by the voters applied retroactively to records that existed before the amendment was passed. One court held that the amendment was retroactive; the other did not. In a 4–3 decision (with a sharply worded dissent), the Florida Supreme Court found that the amendment was indeed retroactive. The court also found that several subsections of new law were in conflict with the amendment passed by the voters, and were thus unconstitutional.

The Florida high court noted that access to peer review information is not to be limited to only those who are themselves patients since that restriction is not contained within the amendment.

But more importantly, the court also said that because part of the new law allows current laws restricting access to adverse incidents to remain in place, the new law is in conflict with the amendment passed by the voters and therefore “cannot stand.”

The dissenting justices argued that the amendment should not be applied retroactively. They noted that hospitals are required to perform peer review as part of medical quality assurance, and that the hospitals should be able to keep peer review records from being used in legal cases. Now that the majority has found the amendment to be retroactive, the dissenters pointed out, that allows for the discovery of records previously kept confidential, a consequence that is “legally unsupportable” and “fundamentally unfair.”

The Florida Supreme Court goofed. In its fervor to address the issue of retroactivity, it created more of a problem than it should have. The majority eviscerates what has become the linchpin for a health care facility's ability to ensure quality of care: its peer review function.

For example, let's take a situation in which a hospital's peer review committee obtains documents relating to an adverse medical incident. From those documents, the peer review committee makes a decision about the care rendered by a particular doctor.

Before the Florida Hospital Waterman case came down, there was an expectation that documents considered by a peer review committee would be privileged from discovery and not admissible in a legal proceeding. With Florida Hospital Waterman, no longer would such documents be cloaked with the protections against discovery provided in Florida. This would be inconsistent with protections against discovery provided in most—if not all—states having peer review statutes.

And, again, according to Florida Hospital Waterman, the right to see such evidence can pertain to documents that existed as of the date the Florida voters passed the constitutional amendment. How far back can the documents go? The court never says.

Another problem is that, for example, an accrediting organization such as the Joint Commission—which credentials a considerable portion of our nation's hospitals and other health care facilities—may find some difficulty with the Florida Hospital Waterman's majority's decision. One area the Joint Commission looks at in its accreditation process are “sentinel events”—those involving deaths or serious injuries. What if a sentinel event is intertwined with an adverse medical incident? All such information would be usable in legal cases under Florida Hospital Waterman, which may make hospital administrators uncomfortable if the commission asks them to produce sentinel event information during an accreditation or reaccreditation process.

Then there is the privacy issue. If privacy laws such as the Health Insurance Portability and Accountability Act (HIPAA) are to be respected, what good is producing an adverse medical incident report that is required by HIPAA but not including identifying information about the patient? HIPAA would thus destroy much of the good intended by the amendment passed by the voters. Moreover, since the amendment doesn't specify exactly who is entitled to such records, then anyone can request such information, regardless of applicable state or federal privacy laws.

Last, but certainly not least, are evidence laws relating to adverse medical incident records. The Florida high court blundered when it stated that a restriction on admitting such records in court cannot stand. Surely the decision on whether the constitutional amendment was retroactive was never intended to circumvent Florida's laws regulating the admissibility of evidence. Yet this is a conundrum that the court majority has now created.

The law is never precise, and many times its development can raise more issues than it solves. That is what has happened here. What the Florida Supreme Court has done needs fixing—by the court somehow amending its decision, or by the Florida legislature harmonizing state law with the constitutional amendment passed by Florida's voters, or by having Florida voters amend the state constitution in some fashion. Only then can physicians in Florida and elsewhere be assured that the confidential work of peer review committees and accreditation organizations will remain confidential.

[email protected]

Imagine being a physician who has been involved in an adverse event—one that, through no real fault of your own, caused death or serious injury to a patient. Should your future patients have a right to know of your involvement?

Florida physicians are dealing with this issue in the wake of a recent decision by the Florida Supreme Court earlier this year, in Florida Hospital Waterman, Inc. etc., v. Teresa M. Buster, etc., et al. (No. SC06–912). In November 2004, Florida voters passed a constitutional amendment titled “Patients' Right to Know About Adverse Medical Incidents.” The amendment let patients obtain “any records made or received in the course of business by a health care facility or provider relating to any adverse medical incident”—as long as the identity of the patients involved in the incidents wasn't revealed, and other privacy restrictions were adhered to. This included incidents that had to be reported to a government agency, or those that were reported to health care facility review committees. The amendment was to become effective immediately.

About 6 months later, in June 2005, the Florida legislature tried to clarify the amendment legislatively, stating that existing restrictions on use of records in court cases stay in place and that “discovering such documents does not mean that any of them can be introduced into evidence in a lawsuit … and [they] may not be used for any purpose, including impeachment, in any civil or administrative action against a health care facility or health care provider.”

Because of the legislature's action, two lower courts in Florida were asked to decide whether the amendment passed by the voters applied retroactively to records that existed before the amendment was passed. One court held that the amendment was retroactive; the other did not. In a 4–3 decision (with a sharply worded dissent), the Florida Supreme Court found that the amendment was indeed retroactive. The court also found that several subsections of new law were in conflict with the amendment passed by the voters, and were thus unconstitutional.

The Florida high court noted that access to peer review information is not to be limited to only those who are themselves patients since that restriction is not contained within the amendment.

But more importantly, the court also said that because part of the new law allows current laws restricting access to adverse incidents to remain in place, the new law is in conflict with the amendment passed by the voters and therefore “cannot stand.”

The dissenting justices argued that the amendment should not be applied retroactively. They noted that hospitals are required to perform peer review as part of medical quality assurance, and that the hospitals should be able to keep peer review records from being used in legal cases. Now that the majority has found the amendment to be retroactive, the dissenters pointed out, that allows for the discovery of records previously kept confidential, a consequence that is “legally unsupportable” and “fundamentally unfair.”

The Florida Supreme Court goofed. In its fervor to address the issue of retroactivity, it created more of a problem than it should have. The majority eviscerates what has become the linchpin for a health care facility's ability to ensure quality of care: its peer review function.

For example, let's take a situation in which a hospital's peer review committee obtains documents relating to an adverse medical incident. From those documents, the peer review committee makes a decision about the care rendered by a particular doctor.

Before the Florida Hospital Waterman case came down, there was an expectation that documents considered by a peer review committee would be privileged from discovery and not admissible in a legal proceeding. With Florida Hospital Waterman, no longer would such documents be cloaked with the protections against discovery provided in Florida. This would be inconsistent with protections against discovery provided in most—if not all—states having peer review statutes.

And, again, according to Florida Hospital Waterman, the right to see such evidence can pertain to documents that existed as of the date the Florida voters passed the constitutional amendment. How far back can the documents go? The court never says.

Another problem is that, for example, an accrediting organization such as the Joint Commission—which credentials a considerable portion of our nation's hospitals and other health care facilities—may find some difficulty with the Florida Hospital Waterman's majority's decision. One area the Joint Commission looks at in its accreditation process are “sentinel events”—those involving deaths or serious injuries. What if a sentinel event is intertwined with an adverse medical incident? All such information would be usable in legal cases under Florida Hospital Waterman, which may make hospital administrators uncomfortable if the commission asks them to produce sentinel event information during an accreditation or reaccreditation process.

Then there is the privacy issue. If privacy laws such as the Health Insurance Portability and Accountability Act (HIPAA) are to be respected, what good is producing an adverse medical incident report that is required by HIPAA but not including identifying information about the patient? HIPAA would thus destroy much of the good intended by the amendment passed by the voters. Moreover, since the amendment doesn't specify exactly who is entitled to such records, then anyone can request such information, regardless of applicable state or federal privacy laws.

Last, but certainly not least, are evidence laws relating to adverse medical incident records. The Florida high court blundered when it stated that a restriction on admitting such records in court cannot stand. Surely the decision on whether the constitutional amendment was retroactive was never intended to circumvent Florida's laws regulating the admissibility of evidence. Yet this is a conundrum that the court majority has now created.

The law is never precise, and many times its development can raise more issues than it solves. That is what has happened here. What the Florida Supreme Court has done needs fixing—by the court somehow amending its decision, or by the Florida legislature harmonizing state law with the constitutional amendment passed by Florida's voters, or by having Florida voters amend the state constitution in some fashion. Only then can physicians in Florida and elsewhere be assured that the confidential work of peer review committees and accreditation organizations will remain confidential.

[email protected]

Imagine being a physician who has been involved in an adverse event—one that, through no real fault of your own, caused death or serious injury to a patient. Should your future patients have a right to know of your involvement?

Florida physicians are dealing with this issue in the wake of a recent decision by the Florida Supreme Court earlier this year, in Florida Hospital Waterman, Inc. etc., v. Teresa M. Buster, etc., et al. (No. SC06–912). In November 2004, Florida voters passed a constitutional amendment titled “Patients' Right to Know About Adverse Medical Incidents.” The amendment let patients obtain “any records made or received in the course of business by a health care facility or provider relating to any adverse medical incident”—as long as the identity of the patients involved in the incidents wasn't revealed, and other privacy restrictions were adhered to. This included incidents that had to be reported to a government agency, or those that were reported to health care facility review committees. The amendment was to become effective immediately.

About 6 months later, in June 2005, the Florida legislature tried to clarify the amendment legislatively, stating that existing restrictions on use of records in court cases stay in place and that “discovering such documents does not mean that any of them can be introduced into evidence in a lawsuit … and [they] may not be used for any purpose, including impeachment, in any civil or administrative action against a health care facility or health care provider.”

Because of the legislature's action, two lower courts in Florida were asked to decide whether the amendment passed by the voters applied retroactively to records that existed before the amendment was passed. One court held that the amendment was retroactive; the other did not. In a 4–3 decision (with a sharply worded dissent), the Florida Supreme Court found that the amendment was indeed retroactive. The court also found that several subsections of new law were in conflict with the amendment passed by the voters, and were thus unconstitutional.

The Florida high court noted that access to peer review information is not to be limited to only those who are themselves patients since that restriction is not contained within the amendment.

But more importantly, the court also said that because part of the new law allows current laws restricting access to adverse incidents to remain in place, the new law is in conflict with the amendment passed by the voters and therefore “cannot stand.”

The dissenting justices argued that the amendment should not be applied retroactively. They noted that hospitals are required to perform peer review as part of medical quality assurance, and that the hospitals should be able to keep peer review records from being used in legal cases. Now that the majority has found the amendment to be retroactive, the dissenters pointed out, that allows for the discovery of records previously kept confidential, a consequence that is “legally unsupportable” and “fundamentally unfair.”

The Florida Supreme Court goofed. In its fervor to address the issue of retroactivity, it created more of a problem than it should have. The majority eviscerates what has become the linchpin for a health care facility's ability to ensure quality of care: its peer review function.

For example, let's take a situation in which a hospital's peer review committee obtains documents relating to an adverse medical incident. From those documents, the peer review committee makes a decision about the care rendered by a particular doctor.

Before the Florida Hospital Waterman case came down, there was an expectation that documents considered by a peer review committee would be privileged from discovery and not admissible in a legal proceeding. With Florida Hospital Waterman, no longer would such documents be cloaked with the protections against discovery provided in Florida. This would be inconsistent with protections against discovery provided in most—if not all—states having peer review statutes.

And, again, according to Florida Hospital Waterman, the right to see such evidence can pertain to documents that existed as of the date the Florida voters passed the constitutional amendment. How far back can the documents go? The court never says.

Another problem is that, for example, an accrediting organization such as the Joint Commission—which credentials a considerable portion of our nation's hospitals and other health care facilities—may find some difficulty with the Florida Hospital Waterman's majority's decision. One area the Joint Commission looks at in its accreditation process are “sentinel events”—those involving deaths or serious injuries. What if a sentinel event is intertwined with an adverse medical incident? All such information would be usable in legal cases under Florida Hospital Waterman, which may make hospital administrators uncomfortable if the commission asks them to produce sentinel event information during an accreditation or reaccreditation process.

Then there is the privacy issue. If privacy laws such as the Health Insurance Portability and Accountability Act (HIPAA) are to be respected, what good is producing an adverse medical incident report that is required by HIPAA but not including identifying information about the patient? HIPAA would thus destroy much of the good intended by the amendment passed by the voters. Moreover, since the amendment doesn't specify exactly who is entitled to such records, then anyone can request such information, regardless of applicable state or federal privacy laws.

Last, but certainly not least, are evidence laws relating to adverse medical incident records. The Florida high court blundered when it stated that a restriction on admitting such records in court cannot stand. Surely the decision on whether the constitutional amendment was retroactive was never intended to circumvent Florida's laws regulating the admissibility of evidence. Yet this is a conundrum that the court majority has now created.

The law is never precise, and many times its development can raise more issues than it solves. That is what has happened here. What the Florida Supreme Court has done needs fixing—by the court somehow amending its decision, or by the Florida legislature harmonizing state law with the constitutional amendment passed by Florida's voters, or by having Florida voters amend the state constitution in some fashion. Only then can physicians in Florida and elsewhere be assured that the confidential work of peer review committees and accreditation organizations will remain confidential.

[email protected]

When he was asked about corporate America during one of his speeches on the presidential campaign trail, former Democratic candidate John Edwards noted, “They don't give the layperson anything; it has to be taken from them.” How true this admonition and observation is when it comes to the plight of health plan members whose health insurance coverage is rescinded just when medical bills come due. The “poster child” for this problem seems to be Health Net Inc. of Woodland Hills, Calif.—for good reason.

On Feb. 21, 2008, California resident Patsy Bates was awarded $9 million in an arbitration proceeding involving Health Net. Ms. Bates had a health insurance policy from another company, but was convinced by an insurance agent to try Health Net. She applied for the new policy in July 2003, and Health Net approved her new policy effective Aug. 1. In September of that year, she was diagnosed with breast cancer. Three months later, Health Net asked that she elaborate on certain answers she gave on her enrollment application. In January 2004, Health Net sent Ms. Bates a letter telling her it was rescinding her health insurance policy. This left her, at the time of the arbitration, with unpaid medical bills totaling nearly $130,000.

Bates sued Health Net for breach of contract, and breach of the duty of good faith and fair dealing. She also claimed that by rescinding her policy, Health Net was guilty of oppression, fraud, or malice.

Evidence presented during the arbitration indicated that after Ms. Bates filled out and signed her application, her agent changed what she gave as her weight; however, he did not tell Ms. Bates about the change, nor did he have her approve the change in writing, as required by law.

One of the standards Health Net used for reviewing applications pertained to weight, that is, if an applicant over age 50 weighed more than 198 pounds, the application could be declined, or “rated a “+50.” Although Ms. Bates' actual weight was not mentioned in the arbitration record, it appears the agent changed the weight listed on the application from another amount to 185. Ms. Bates' application was initially approved without further investigation or follow-up.

Ms. Bates was a victim of one of the frequent “rescission investigations” performed by Health Net employees. Information omitted from an application, even by mistake, could be grounds for rescission, and employee bonuses were tied to the rescission investigations. “It's difficult to imagine a policy more reprehensible than tying bonuses to encourage the rescission of health insurance that helps keep the public well and alive,” wrote the arbitrator in the case.

Ms. Bates claimed that the rescission of her policy was in bad faith because it was based upon the information supplied in the initially approved application. If there was a problem, it should have been investigated before the policy was issued so that if it was declined, she could still keep her previous coverage.

The arbitrator concluded that Health Net was more concerned with its own financial interests than concerns for the interests of Ms. Bates. The award covered Ms. Bates' medical expenses, emotional distress, and nearly $8.5 million in punitive damages. According to one newspaper article, this ruling was the first of its kind, and the most powerful rebuke to California's major insurers concerning the practice of rescinding health insurance policies.

A day before the Bates decision came out, the Los Angeles City Attorney filed a 47-page lawsuit against Health Net and its various entities for claims based on unfair competition and false advertising (Dkt. No. BC385816, Sup. Ct., Cty. of Los Angeles). The thrust of this lawsuit is that coverage provided by Health Net and its member companies is largely illusory because they rescind coverage upon submission of a substantial claim for benefits, as was the case with Ms. Bates. That suit is ongoing.

For its part, Health Net reported that it paid out claims in excess of $200 million in 2006 and that its program of tying bonuses to number of rescinded health insurance contracts has been dropped. The company also said that it has halted cancellations and that it would be changing its coverage applications and retraining its sales force.

Health Net is not the only California insurer in the crosshairs of legal scrutiny. Los Angeles City Attorney Rocky Delgadillo announced in April that he is suing Anthem Blue Cross for illegally canceling the policies of more than 6,000 California residents. There is also the year-old class-action suit against Anthem for canceling policies, and a case joined in last year by the largest organizations representing California doctors and hospitals, accusing the state's largest health plan of illegally and routinely refusing to pay millions of dollars for medical care provided to enrollees whose policies were later canceled.

Then, of course, there was the much-publicized decision earlier this year when Cigna HealthCare denied a liver transplant for a 17-year-old girl in California. The insurer then changed its mind, but it was too late—the girl died a few hours after the reversal was announced. Another insurer decided that after years of paying for nursing care for a badly disabled boy, the boy no longer needed it, even though he suffered from severe brain damage and was unable to walk, sit up, speak, or eat by mouth.

California's Department of Managed Health Care is trying to help people get their policies back. In mid-April, the department announced that it was ordering immediate reinstatement of policies for 26 consumers whose policies the department found were wrongfully rescinded. The department is also ordering a re-review of all other rescissions over the past 4 years as part of its ongoing investigation into the rescission practices of five of the largest health plans that offer individual coverage to state residents.

From all these examples, one could assert that there is a problem in California with insurers' wanting to get out of insurance contracts once an illness or treatment has occurred. But is it an epidemic, or is this problem of rescission limited to California? Evidence has not suggested the problem is “systemic” nationwide, but where there is smoke, there surely is fire. One thing is certain: Insurers seem to be playing the “blame game”—blaming consumers for not filling out applications for coverage properly when these companies have failed to properly investigate the contents of those applications. Ain't that the American way now—place blame on others for your own failings?

Equally noteworthy is that when insurers rescind health coverage due to their own shortcomings, they can still retain premiums paid by patients or employers, deny payments to doctors and health care facilities for care rendered—and perhaps then make their profit margins even heftier. Moreover, buying insurance to protect against a loss or risk is the expectation of only those who buy the insurance—and also, perhaps, the physicians who treat patients because they have certain insurance coverage; they are expecting to be paid by that insurer. Another perspective exists, however: to see how inventive an entity protecting against that risk can be to deny or limit the coverage purchased, and to find ways to preclude the doctors who treat those patients from getting paid.

In the end, maybe the Latin, caveat emptor, might be worth thinking about. However, it should never come to this, since the insurance laws of any state in which an insurer wishes to write health policies should be inclusive of a provision or two barring cancellations or rescissions of policies based on innocent or negligently made mistakes done by the insured or anyone acting on behalf of the insured in filling out an application for insurance.

Regardless of what remedies are put in place, a perception also certainly exists that rescission of health care coverage only adds to the woes of the health care crisis now engulfing our economy and nation today. But what is important for the reader to know is that maybe health insurers do not insure medical disease or injury, but instead ensure that they will avoid risks themselves once a patient makes a claim.

[email protected]

When he was asked about corporate America during one of his speeches on the presidential campaign trail, former Democratic candidate John Edwards noted, “They don't give the layperson anything; it has to be taken from them.” How true this admonition and observation is when it comes to the plight of health plan members whose health insurance coverage is rescinded just when medical bills come due. The “poster child” for this problem seems to be Health Net Inc. of Woodland Hills, Calif.—for good reason.

On Feb. 21, 2008, California resident Patsy Bates was awarded $9 million in an arbitration proceeding involving Health Net. Ms. Bates had a health insurance policy from another company, but was convinced by an insurance agent to try Health Net. She applied for the new policy in July 2003, and Health Net approved her new policy effective Aug. 1. In September of that year, she was diagnosed with breast cancer. Three months later, Health Net asked that she elaborate on certain answers she gave on her enrollment application. In January 2004, Health Net sent Ms. Bates a letter telling her it was rescinding her health insurance policy. This left her, at the time of the arbitration, with unpaid medical bills totaling nearly $130,000.

Bates sued Health Net for breach of contract, and breach of the duty of good faith and fair dealing. She also claimed that by rescinding her policy, Health Net was guilty of oppression, fraud, or malice.

Evidence presented during the arbitration indicated that after Ms. Bates filled out and signed her application, her agent changed what she gave as her weight; however, he did not tell Ms. Bates about the change, nor did he have her approve the change in writing, as required by law.

One of the standards Health Net used for reviewing applications pertained to weight, that is, if an applicant over age 50 weighed more than 198 pounds, the application could be declined, or “rated a “+50.” Although Ms. Bates' actual weight was not mentioned in the arbitration record, it appears the agent changed the weight listed on the application from another amount to 185. Ms. Bates' application was initially approved without further investigation or follow-up.

Ms. Bates was a victim of one of the frequent “rescission investigations” performed by Health Net employees. Information omitted from an application, even by mistake, could be grounds for rescission, and employee bonuses were tied to the rescission investigations. “It's difficult to imagine a policy more reprehensible than tying bonuses to encourage the rescission of health insurance that helps keep the public well and alive,” wrote the arbitrator in the case.

Ms. Bates claimed that the rescission of her policy was in bad faith because it was based upon the information supplied in the initially approved application. If there was a problem, it should have been investigated before the policy was issued so that if it was declined, she could still keep her previous coverage.

The arbitrator concluded that Health Net was more concerned with its own financial interests than concerns for the interests of Ms. Bates. The award covered Ms. Bates' medical expenses, emotional distress, and nearly $8.5 million in punitive damages. According to one newspaper article, this ruling was the first of its kind, and the most powerful rebuke to California's major insurers concerning the practice of rescinding health insurance policies.

A day before the Bates decision came out, the Los Angeles City Attorney filed a 47-page lawsuit against Health Net and its various entities for claims based on unfair competition and false advertising (Dkt. No. BC385816, Sup. Ct., Cty. of Los Angeles). The thrust of this lawsuit is that coverage provided by Health Net and its member companies is largely illusory because they rescind coverage upon submission of a substantial claim for benefits, as was the case with Ms. Bates. That suit is ongoing.

For its part, Health Net reported that it paid out claims in excess of $200 million in 2006 and that its program of tying bonuses to number of rescinded health insurance contracts has been dropped. The company also said that it has halted cancellations and that it would be changing its coverage applications and retraining its sales force.

Health Net is not the only California insurer in the crosshairs of legal scrutiny. Los Angeles City Attorney Rocky Delgadillo announced in April that he is suing Anthem Blue Cross for illegally canceling the policies of more than 6,000 California residents. There is also the year-old class-action suit against Anthem for canceling policies, and a case joined in last year by the largest organizations representing California doctors and hospitals, accusing the state's largest health plan of illegally and routinely refusing to pay millions of dollars for medical care provided to enrollees whose policies were later canceled.

Then, of course, there was the much-publicized decision earlier this year when Cigna HealthCare denied a liver transplant for a 17-year-old girl in California. The insurer then changed its mind, but it was too late—the girl died a few hours after the reversal was announced. Another insurer decided that after years of paying for nursing care for a badly disabled boy, the boy no longer needed it, even though he suffered from severe brain damage and was unable to walk, sit up, speak, or eat by mouth.

California's Department of Managed Health Care is trying to help people get their policies back. In mid-April, the department announced that it was ordering immediate reinstatement of policies for 26 consumers whose policies the department found were wrongfully rescinded. The department is also ordering a re-review of all other rescissions over the past 4 years as part of its ongoing investigation into the rescission practices of five of the largest health plans that offer individual coverage to state residents.

From all these examples, one could assert that there is a problem in California with insurers' wanting to get out of insurance contracts once an illness or treatment has occurred. But is it an epidemic, or is this problem of rescission limited to California? Evidence has not suggested the problem is “systemic” nationwide, but where there is smoke, there surely is fire. One thing is certain: Insurers seem to be playing the “blame game”—blaming consumers for not filling out applications for coverage properly when these companies have failed to properly investigate the contents of those applications. Ain't that the American way now—place blame on others for your own failings?

Equally noteworthy is that when insurers rescind health coverage due to their own shortcomings, they can still retain premiums paid by patients or employers, deny payments to doctors and health care facilities for care rendered—and perhaps then make their profit margins even heftier. Moreover, buying insurance to protect against a loss or risk is the expectation of only those who buy the insurance—and also, perhaps, the physicians who treat patients because they have certain insurance coverage; they are expecting to be paid by that insurer. Another perspective exists, however: to see how inventive an entity protecting against that risk can be to deny or limit the coverage purchased, and to find ways to preclude the doctors who treat those patients from getting paid.

In the end, maybe the Latin, caveat emptor, might be worth thinking about. However, it should never come to this, since the insurance laws of any state in which an insurer wishes to write health policies should be inclusive of a provision or two barring cancellations or rescissions of policies based on innocent or negligently made mistakes done by the insured or anyone acting on behalf of the insured in filling out an application for insurance.

Regardless of what remedies are put in place, a perception also certainly exists that rescission of health care coverage only adds to the woes of the health care crisis now engulfing our economy and nation today. But what is important for the reader to know is that maybe health insurers do not insure medical disease or injury, but instead ensure that they will avoid risks themselves once a patient makes a claim.

[email protected]

When he was asked about corporate America during one of his speeches on the presidential campaign trail, former Democratic candidate John Edwards noted, “They don't give the layperson anything; it has to be taken from them.” How true this admonition and observation is when it comes to the plight of health plan members whose health insurance coverage is rescinded just when medical bills come due. The “poster child” for this problem seems to be Health Net Inc. of Woodland Hills, Calif.—for good reason.

On Feb. 21, 2008, California resident Patsy Bates was awarded $9 million in an arbitration proceeding involving Health Net. Ms. Bates had a health insurance policy from another company, but was convinced by an insurance agent to try Health Net. She applied for the new policy in July 2003, and Health Net approved her new policy effective Aug. 1. In September of that year, she was diagnosed with breast cancer. Three months later, Health Net asked that she elaborate on certain answers she gave on her enrollment application. In January 2004, Health Net sent Ms. Bates a letter telling her it was rescinding her health insurance policy. This left her, at the time of the arbitration, with unpaid medical bills totaling nearly $130,000.

Bates sued Health Net for breach of contract, and breach of the duty of good faith and fair dealing. She also claimed that by rescinding her policy, Health Net was guilty of oppression, fraud, or malice.

Evidence presented during the arbitration indicated that after Ms. Bates filled out and signed her application, her agent changed what she gave as her weight; however, he did not tell Ms. Bates about the change, nor did he have her approve the change in writing, as required by law.

One of the standards Health Net used for reviewing applications pertained to weight, that is, if an applicant over age 50 weighed more than 198 pounds, the application could be declined, or “rated a “+50.” Although Ms. Bates' actual weight was not mentioned in the arbitration record, it appears the agent changed the weight listed on the application from another amount to 185. Ms. Bates' application was initially approved without further investigation or follow-up.

Ms. Bates was a victim of one of the frequent “rescission investigations” performed by Health Net employees. Information omitted from an application, even by mistake, could be grounds for rescission, and employee bonuses were tied to the rescission investigations. “It's difficult to imagine a policy more reprehensible than tying bonuses to encourage the rescission of health insurance that helps keep the public well and alive,” wrote the arbitrator in the case.

Ms. Bates claimed that the rescission of her policy was in bad faith because it was based upon the information supplied in the initially approved application. If there was a problem, it should have been investigated before the policy was issued so that if it was declined, she could still keep her previous coverage.

The arbitrator concluded that Health Net was more concerned with its own financial interests than concerns for the interests of Ms. Bates. The award covered Ms. Bates' medical expenses, emotional distress, and nearly $8.5 million in punitive damages. According to one newspaper article, this ruling was the first of its kind, and the most powerful rebuke to California's major insurers concerning the practice of rescinding health insurance policies.

A day before the Bates decision came out, the Los Angeles City Attorney filed a 47-page lawsuit against Health Net and its various entities for claims based on unfair competition and false advertising (Dkt. No. BC385816, Sup. Ct., Cty. of Los Angeles). The thrust of this lawsuit is that coverage provided by Health Net and its member companies is largely illusory because they rescind coverage upon submission of a substantial claim for benefits, as was the case with Ms. Bates. That suit is ongoing.

For its part, Health Net reported that it paid out claims in excess of $200 million in 2006 and that its program of tying bonuses to number of rescinded health insurance contracts has been dropped. The company also said that it has halted cancellations and that it would be changing its coverage applications and retraining its sales force.

Health Net is not the only California insurer in the crosshairs of legal scrutiny. Los Angeles City Attorney Rocky Delgadillo announced in April that he is suing Anthem Blue Cross for illegally canceling the policies of more than 6,000 California residents. There is also the year-old class-action suit against Anthem for canceling policies, and a case joined in last year by the largest organizations representing California doctors and hospitals, accusing the state's largest health plan of illegally and routinely refusing to pay millions of dollars for medical care provided to enrollees whose policies were later canceled.

Then, of course, there was the much-publicized decision earlier this year when Cigna HealthCare denied a liver transplant for a 17-year-old girl in California. The insurer then changed its mind, but it was too late—the girl died a few hours after the reversal was announced. Another insurer decided that after years of paying for nursing care for a badly disabled boy, the boy no longer needed it, even though he suffered from severe brain damage and was unable to walk, sit up, speak, or eat by mouth.

California's Department of Managed Health Care is trying to help people get their policies back. In mid-April, the department announced that it was ordering immediate reinstatement of policies for 26 consumers whose policies the department found were wrongfully rescinded. The department is also ordering a re-review of all other rescissions over the past 4 years as part of its ongoing investigation into the rescission practices of five of the largest health plans that offer individual coverage to state residents.

From all these examples, one could assert that there is a problem in California with insurers' wanting to get out of insurance contracts once an illness or treatment has occurred. But is it an epidemic, or is this problem of rescission limited to California? Evidence has not suggested the problem is “systemic” nationwide, but where there is smoke, there surely is fire. One thing is certain: Insurers seem to be playing the “blame game”—blaming consumers for not filling out applications for coverage properly when these companies have failed to properly investigate the contents of those applications. Ain't that the American way now—place blame on others for your own failings?

Equally noteworthy is that when insurers rescind health coverage due to their own shortcomings, they can still retain premiums paid by patients or employers, deny payments to doctors and health care facilities for care rendered—and perhaps then make their profit margins even heftier. Moreover, buying insurance to protect against a loss or risk is the expectation of only those who buy the insurance—and also, perhaps, the physicians who treat patients because they have certain insurance coverage; they are expecting to be paid by that insurer. Another perspective exists, however: to see how inventive an entity protecting against that risk can be to deny or limit the coverage purchased, and to find ways to preclude the doctors who treat those patients from getting paid.

In the end, maybe the Latin, caveat emptor, might be worth thinking about. However, it should never come to this, since the insurance laws of any state in which an insurer wishes to write health policies should be inclusive of a provision or two barring cancellations or rescissions of policies based on innocent or negligently made mistakes done by the insured or anyone acting on behalf of the insured in filling out an application for insurance.

Regardless of what remedies are put in place, a perception also certainly exists that rescission of health care coverage only adds to the woes of the health care crisis now engulfing our economy and nation today. But what is important for the reader to know is that maybe health insurers do not insure medical disease or injury, but instead ensure that they will avoid risks themselves once a patient makes a claim.

[email protected]

Peer review, which plays an important role in reviewing medical care in hospital settings, sometimes is abused and warped to a degree never envisioned by legislators.

Two examples now moving through state legal systems warrant attention. They are Joseph Kamelgard, M.D. v. the American College of Surgeons (Circuit Court of Cook County, Ill.), and Charles Yancey, M.D. v. American Academy of Ophthalmology, et al. (4th Judicial District, Hennepin County, Minn.).

In the Kamelgard case, Dr. Kamelgard, a well-regarded bariatric surgeon from New Jersey, testified for the first time as a medical expert in a malpractice lawsuit in federal court in Brooklyn, N.Y. The plaintiff, a New York resident, was cared for at a Staten Island hospital. The defendant was a physician who, according to court records, had been named previously in professional liability cases. The jury decided in favor of the defendant physician.

The defendant physician never challenged Dr. Kamelgard's testimony. But the defendant later filed a complaint with the American College of Surgeons (ACS), accusing Dr. Kamelgard of allegedly testifying falsely regarding relevant standards of care. The ACS decided to charge Dr. Kamelgard with violating its rules, but shortly before a scheduled hearing, lawyers intervened on Dr. Kamelgard's behalf. The ACS later dropped the case; no explanation was ever given.

Despite Dr. Kamelgard's requests, the ACS refused to provide him with a copy of the complaint against him, the identity of his accuser, or even the names of the three members of the ACS deemed qualified as bariatric surgeons to review the complaint for the college.

Dr. Kamelgard filed a petition seeking the identities of these three members. The ACS asserted that what was being sought was protected by the state's Medical Studies Act (MSA), its peer review statute.

According to court filings, the ACS admitted that no practice of medicine occurred in Illinois, that testifying equates to the practice of medicine, and that by testifying there Dr. Kamelgard practiced medicine in New York (though New York's statute defining medical practice does not include testifying). But even though he was not licensed in Illinois and had no connection to the state except belonging to the ACS headquartered there, the ACS wrote that any physician who becomes a member agrees to be bound by Illinois law. The ACS, which has over 74,000 members worldwide, suggests by this case that Illinois law governs its conduct.

In the Minnesota case, Dr. Yancey sued a Dr. Weis, and his expert, a Dr. Hardten, for defamation as a result of their filing an ethics complaint against him with the American Academy of Ophthalmology (AAO). At the time the ethics charge was filed, Dr. Yancey was the expert medical witness for the plaintiff in a malpractice case in which Dr. Weis was a defendant. (As with Dr. Kamelgard, this was the first time that Dr. Yancey had ever testified as a medical expert.) Dr. Yancey also asserted that the AAO violated its own rules when it handled the complaint against him, including not keeping the matter confidential.

After a jury returned a verdict for $3 million in favor of the plaintiff, the case was going to be retried on damages with Dr. Yancey again offering testimony. But a day before this was to occur, the AAO served on him the ethics charge Dr. Weis and Dr. Hardten had filed.

According to his lawyer, Dr. Yancey claimed the ethics charge was an attempt to force him to alter his testimony, and to chill his ability to testify in other, subsequent cases that may have come his way. The defendants moved to dismiss Dr. Yancey's complaint and, in the alternative, for the summary judgment.

In the Kamelgard case, which is pending in Illinois but now on appeal, it remains to be seen whether an Illinois court will opine on how the ACS believes the Illinois statute should be used. The Yancey case is also still pending.

State peer review statutes were enacted to maintain and improve health care by keeping the products of a peer review committee privileged from discovery. (The exception to this is when certain cases are litigated in federal court—see my column “A Matter of Privilege,” Jan. 15, 2008, p. 34.)

The Yancey and Kamelgard cases highlight attempts to redefine peer review statutes to include judging expert testimony within the practice of medicine. Such statutes were also not intended to apply solely because an organization is headquartered in a particular state without any health care rendered there, or to chill an expert from further testifying during the course of a legal proceeding.

These cases also show that professional medical organizations sometimes seek to muzzle health care providers when their testimony is inappropriate in the eyes of such organizations. This trend may be influenced in part by a resolution adopted years ago by the American Medical Association declaring that testifying is considered the practice of medicine.

Granted, some physicians don't belong in a courtroom offering expert testimony. However, the Kamelgard and Yancey cases illustrate the Damoclean swords that professional societies may think they can wield in order to prevent physicians from offering legitimate expert medical testimony. After all, giving expert opinion is not rendering patient care, and thus is not generally considered the practice of medicine under state law.

If you are a physician wishing to consult or testify, don't be dissuaded from doing so—provided that you review all medical records properly and thoroughly, you are well credentialed, and you are familiar with all applicable medical standards by way of background, experience, and training. In addition, consult not only with your own organizations as to their standards and policies on testifying, but also ask the lawyer who retains you what your state law requires of experts who testify in legal cases.

[email protected]

Peer review, which plays an important role in reviewing medical care in hospital settings, sometimes is abused and warped to a degree never envisioned by legislators.

Two examples now moving through state legal systems warrant attention. They are Joseph Kamelgard, M.D. v. the American College of Surgeons (Circuit Court of Cook County, Ill.), and Charles Yancey, M.D. v. American Academy of Ophthalmology, et al. (4th Judicial District, Hennepin County, Minn.).

In the Kamelgard case, Dr. Kamelgard, a well-regarded bariatric surgeon from New Jersey, testified for the first time as a medical expert in a malpractice lawsuit in federal court in Brooklyn, N.Y. The plaintiff, a New York resident, was cared for at a Staten Island hospital. The defendant was a physician who, according to court records, had been named previously in professional liability cases. The jury decided in favor of the defendant physician.

The defendant physician never challenged Dr. Kamelgard's testimony. But the defendant later filed a complaint with the American College of Surgeons (ACS), accusing Dr. Kamelgard of allegedly testifying falsely regarding relevant standards of care. The ACS decided to charge Dr. Kamelgard with violating its rules, but shortly before a scheduled hearing, lawyers intervened on Dr. Kamelgard's behalf. The ACS later dropped the case; no explanation was ever given.

Despite Dr. Kamelgard's requests, the ACS refused to provide him with a copy of the complaint against him, the identity of his accuser, or even the names of the three members of the ACS deemed qualified as bariatric surgeons to review the complaint for the college.

Dr. Kamelgard filed a petition seeking the identities of these three members. The ACS asserted that what was being sought was protected by the state's Medical Studies Act (MSA), its peer review statute.

According to court filings, the ACS admitted that no practice of medicine occurred in Illinois, that testifying equates to the practice of medicine, and that by testifying there Dr. Kamelgard practiced medicine in New York (though New York's statute defining medical practice does not include testifying). But even though he was not licensed in Illinois and had no connection to the state except belonging to the ACS headquartered there, the ACS wrote that any physician who becomes a member agrees to be bound by Illinois law. The ACS, which has over 74,000 members worldwide, suggests by this case that Illinois law governs its conduct.

In the Minnesota case, Dr. Yancey sued a Dr. Weis, and his expert, a Dr. Hardten, for defamation as a result of their filing an ethics complaint against him with the American Academy of Ophthalmology (AAO). At the time the ethics charge was filed, Dr. Yancey was the expert medical witness for the plaintiff in a malpractice case in which Dr. Weis was a defendant. (As with Dr. Kamelgard, this was the first time that Dr. Yancey had ever testified as a medical expert.) Dr. Yancey also asserted that the AAO violated its own rules when it handled the complaint against him, including not keeping the matter confidential.

After a jury returned a verdict for $3 million in favor of the plaintiff, the case was going to be retried on damages with Dr. Yancey again offering testimony. But a day before this was to occur, the AAO served on him the ethics charge Dr. Weis and Dr. Hardten had filed.

According to his lawyer, Dr. Yancey claimed the ethics charge was an attempt to force him to alter his testimony, and to chill his ability to testify in other, subsequent cases that may have come his way. The defendants moved to dismiss Dr. Yancey's complaint and, in the alternative, for the summary judgment.

In the Kamelgard case, which is pending in Illinois but now on appeal, it remains to be seen whether an Illinois court will opine on how the ACS believes the Illinois statute should be used. The Yancey case is also still pending.

State peer review statutes were enacted to maintain and improve health care by keeping the products of a peer review committee privileged from discovery. (The exception to this is when certain cases are litigated in federal court—see my column “A Matter of Privilege,” Jan. 15, 2008, p. 34.)

The Yancey and Kamelgard cases highlight attempts to redefine peer review statutes to include judging expert testimony within the practice of medicine. Such statutes were also not intended to apply solely because an organization is headquartered in a particular state without any health care rendered there, or to chill an expert from further testifying during the course of a legal proceeding.

These cases also show that professional medical organizations sometimes seek to muzzle health care providers when their testimony is inappropriate in the eyes of such organizations. This trend may be influenced in part by a resolution adopted years ago by the American Medical Association declaring that testifying is considered the practice of medicine.

Granted, some physicians don't belong in a courtroom offering expert testimony. However, the Kamelgard and Yancey cases illustrate the Damoclean swords that professional societies may think they can wield in order to prevent physicians from offering legitimate expert medical testimony. After all, giving expert opinion is not rendering patient care, and thus is not generally considered the practice of medicine under state law.

If you are a physician wishing to consult or testify, don't be dissuaded from doing so—provided that you review all medical records properly and thoroughly, you are well credentialed, and you are familiar with all applicable medical standards by way of background, experience, and training. In addition, consult not only with your own organizations as to their standards and policies on testifying, but also ask the lawyer who retains you what your state law requires of experts who testify in legal cases.

[email protected]

Peer review, which plays an important role in reviewing medical care in hospital settings, sometimes is abused and warped to a degree never envisioned by legislators.

Two examples now moving through state legal systems warrant attention. They are Joseph Kamelgard, M.D. v. the American College of Surgeons (Circuit Court of Cook County, Ill.), and Charles Yancey, M.D. v. American Academy of Ophthalmology, et al. (4th Judicial District, Hennepin County, Minn.).

In the Kamelgard case, Dr. Kamelgard, a well-regarded bariatric surgeon from New Jersey, testified for the first time as a medical expert in a malpractice lawsuit in federal court in Brooklyn, N.Y. The plaintiff, a New York resident, was cared for at a Staten Island hospital. The defendant was a physician who, according to court records, had been named previously in professional liability cases. The jury decided in favor of the defendant physician.

The defendant physician never challenged Dr. Kamelgard's testimony. But the defendant later filed a complaint with the American College of Surgeons (ACS), accusing Dr. Kamelgard of allegedly testifying falsely regarding relevant standards of care. The ACS decided to charge Dr. Kamelgard with violating its rules, but shortly before a scheduled hearing, lawyers intervened on Dr. Kamelgard's behalf. The ACS later dropped the case; no explanation was ever given.

Despite Dr. Kamelgard's requests, the ACS refused to provide him with a copy of the complaint against him, the identity of his accuser, or even the names of the three members of the ACS deemed qualified as bariatric surgeons to review the complaint for the college.

Dr. Kamelgard filed a petition seeking the identities of these three members. The ACS asserted that what was being sought was protected by the state's Medical Studies Act (MSA), its peer review statute.

According to court filings, the ACS admitted that no practice of medicine occurred in Illinois, that testifying equates to the practice of medicine, and that by testifying there Dr. Kamelgard practiced medicine in New York (though New York's statute defining medical practice does not include testifying). But even though he was not licensed in Illinois and had no connection to the state except belonging to the ACS headquartered there, the ACS wrote that any physician who becomes a member agrees to be bound by Illinois law. The ACS, which has over 74,000 members worldwide, suggests by this case that Illinois law governs its conduct.

In the Minnesota case, Dr. Yancey sued a Dr. Weis, and his expert, a Dr. Hardten, for defamation as a result of their filing an ethics complaint against him with the American Academy of Ophthalmology (AAO). At the time the ethics charge was filed, Dr. Yancey was the expert medical witness for the plaintiff in a malpractice case in which Dr. Weis was a defendant. (As with Dr. Kamelgard, this was the first time that Dr. Yancey had ever testified as a medical expert.) Dr. Yancey also asserted that the AAO violated its own rules when it handled the complaint against him, including not keeping the matter confidential.

After a jury returned a verdict for $3 million in favor of the plaintiff, the case was going to be retried on damages with Dr. Yancey again offering testimony. But a day before this was to occur, the AAO served on him the ethics charge Dr. Weis and Dr. Hardten had filed.

According to his lawyer, Dr. Yancey claimed the ethics charge was an attempt to force him to alter his testimony, and to chill his ability to testify in other, subsequent cases that may have come his way. The defendants moved to dismiss Dr. Yancey's complaint and, in the alternative, for the summary judgment.

In the Kamelgard case, which is pending in Illinois but now on appeal, it remains to be seen whether an Illinois court will opine on how the ACS believes the Illinois statute should be used. The Yancey case is also still pending.

State peer review statutes were enacted to maintain and improve health care by keeping the products of a peer review committee privileged from discovery. (The exception to this is when certain cases are litigated in federal court—see my column “A Matter of Privilege,” Jan. 15, 2008, p. 34.)

The Yancey and Kamelgard cases highlight attempts to redefine peer review statutes to include judging expert testimony within the practice of medicine. Such statutes were also not intended to apply solely because an organization is headquartered in a particular state without any health care rendered there, or to chill an expert from further testifying during the course of a legal proceeding.

These cases also show that professional medical organizations sometimes seek to muzzle health care providers when their testimony is inappropriate in the eyes of such organizations. This trend may be influenced in part by a resolution adopted years ago by the American Medical Association declaring that testifying is considered the practice of medicine.

Granted, some physicians don't belong in a courtroom offering expert testimony. However, the Kamelgard and Yancey cases illustrate the Damoclean swords that professional societies may think they can wield in order to prevent physicians from offering legitimate expert medical testimony. After all, giving expert opinion is not rendering patient care, and thus is not generally considered the practice of medicine under state law.

If you are a physician wishing to consult or testify, don't be dissuaded from doing so—provided that you review all medical records properly and thoroughly, you are well credentialed, and you are familiar with all applicable medical standards by way of background, experience, and training. In addition, consult not only with your own organizations as to their standards and policies on testifying, but also ask the lawyer who retains you what your state law requires of experts who testify in legal cases.

[email protected]

Can a managed care enrollee sue his plan if he is injured because of what he claims was the result of poor care and treatment by a plan physician? If he dies, can his estate sue the plan for damages?

Before 2004, the answers were uncertain. The legal cases that had been decided were definitely a mixed bag, depending upon whether the assertions against the managed care plan were found to involve strictly patient care, administrative decisions, or both.

Strict patient care would fall under state law governing medical negligence cases. If the allegations were solely administrative, the case would come under a federal statute known as the Employee Retirement Income Security Act, or ERISA.

ERISA was originally intended by Congress to govern the rights of pension plan beneficiaries. But legal cases morphed this legislation into protection for ERISA health plans against state-filed lawsuits based on medical malpractice.

When allegations involved both patient care and administrative decisions, some cases were not preempted by ERISA while others were—it depended on how the court interpreted what the injured party asserted. If the court decided that the lawsuit fell under ERISA, that party would be entitled only to the cost of the denied benefit (generally just the cost of the treatment or procedure in question). If ERISA did not preempt the lawsuit (or if the health plan was not governed by ERISA), the enrollee would be entitled to all remedies allowed under state law.

The landscape for these types of decisions changed in 2004, when the Supreme Court decided two cases—Aetna Health Inc. v. Davila and Cigna Corp. v. Calad—in which the patient sued for wrongful denial of coverage.

In the Calad case, Ruby Calad's physician recommended an extended hospital stay after Ms. Calad had a surgical procedure. The managed care plan, through its discharge nurse, thought the extension was unnecessary, and Ms. Calad was discharged from the hospital. Once home, she experienced postsurgical complications that required follow-up care.

In the Davila case, Juan Davila had various ailments, including diabetes, gastric ulcer disease, and arthritis. He was insured through Aetna's managed care plan. His physician, who was not in Aetna's network, recommended Vioxx (rofecoxib) for the treatment of his arthritis.

However, before allowing the use of Vioxx, Aetna required that Mr. Davila try two other medications, both less expensive than Vioxx. While on those “preferred” drugs, he experienced bleeding ulcers, internal bleeding, and a near heart attack. Because of the additional gastric impairment, he was no longer able to take medication absorbed through his stomach.

Both lawsuits eventually made their way to the Supreme Court, which decided that the lawsuits fell under ERISA and that both concerned benefits (coverage) promised to the plaintiffs. The suits were not interpreted as asserting inappropriate medical care and treatment. Therefore, the plaintiffs could seek only the benefits promised but not delivered and no other damages.

Justice Ruth Bader Ginsburg, citing the words of an appeals court judge in another case, said, “I also join 'the rising judicial chorus urging that Congress and [this] Court revisit what is an unjust and increasingly tangled ERISA regime.'” That is to say, ERISA has been interpreted to provide protections to managed care plans that were never intended.

This decision means that if a physician is named in a lawsuit together with a managed care plan, and the suit falls under the ERISA statute, the odds are great that the only exposure to both parties will be the cost of the benefit denied.

The physician might still be sued separately. But unless and until Congress revisits the ERISA statute, physicians might find that being part of an ERISA plan isn't such a bad position to be in.

[email protected]

Can a managed care enrollee sue his plan if he is injured because of what he claims was the result of poor care and treatment by a plan physician? If he dies, can his estate sue the plan for damages?

Before 2004, the answers were uncertain. The legal cases that had been decided were definitely a mixed bag, depending upon whether the assertions against the managed care plan were found to involve strictly patient care, administrative decisions, or both.

Strict patient care would fall under state law governing medical negligence cases. If the allegations were solely administrative, the case would come under a federal statute known as the Employee Retirement Income Security Act, or ERISA.

ERISA was originally intended by Congress to govern the rights of pension plan beneficiaries. But legal cases morphed this legislation into protection for ERISA health plans against state-filed lawsuits based on medical malpractice.

When allegations involved both patient care and administrative decisions, some cases were not preempted by ERISA while others were—it depended on how the court interpreted what the injured party asserted. If the court decided that the lawsuit fell under ERISA, that party would be entitled only to the cost of the denied benefit (generally just the cost of the treatment or procedure in question). If ERISA did not preempt the lawsuit (or if the health plan was not governed by ERISA), the enrollee would be entitled to all remedies allowed under state law.

The landscape for these types of decisions changed in 2004, when the Supreme Court decided two cases—Aetna Health Inc. v. Davila and Cigna Corp. v. Calad—in which the patient sued for wrongful denial of coverage.

In the Calad case, Ruby Calad's physician recommended an extended hospital stay after Ms. Calad had a surgical procedure. The managed care plan, through its discharge nurse, thought the extension was unnecessary, and Ms. Calad was discharged from the hospital. Once home, she experienced postsurgical complications that required follow-up care.

In the Davila case, Juan Davila had various ailments, including diabetes, gastric ulcer disease, and arthritis. He was insured through Aetna's managed care plan. His physician, who was not in Aetna's network, recommended Vioxx (rofecoxib) for the treatment of his arthritis.

However, before allowing the use of Vioxx, Aetna required that Mr. Davila try two other medications, both less expensive than Vioxx. While on those “preferred” drugs, he experienced bleeding ulcers, internal bleeding, and a near heart attack. Because of the additional gastric impairment, he was no longer able to take medication absorbed through his stomach.

Both lawsuits eventually made their way to the Supreme Court, which decided that the lawsuits fell under ERISA and that both concerned benefits (coverage) promised to the plaintiffs. The suits were not interpreted as asserting inappropriate medical care and treatment. Therefore, the plaintiffs could seek only the benefits promised but not delivered and no other damages.

Justice Ruth Bader Ginsburg, citing the words of an appeals court judge in another case, said, “I also join 'the rising judicial chorus urging that Congress and [this] Court revisit what is an unjust and increasingly tangled ERISA regime.'” That is to say, ERISA has been interpreted to provide protections to managed care plans that were never intended.

This decision means that if a physician is named in a lawsuit together with a managed care plan, and the suit falls under the ERISA statute, the odds are great that the only exposure to both parties will be the cost of the benefit denied.

The physician might still be sued separately. But unless and until Congress revisits the ERISA statute, physicians might find that being part of an ERISA plan isn't such a bad position to be in.

[email protected]

Can a managed care enrollee sue his plan if he is injured because of what he claims was the result of poor care and treatment by a plan physician? If he dies, can his estate sue the plan for damages?

Before 2004, the answers were uncertain. The legal cases that had been decided were definitely a mixed bag, depending upon whether the assertions against the managed care plan were found to involve strictly patient care, administrative decisions, or both.

Strict patient care would fall under state law governing medical negligence cases. If the allegations were solely administrative, the case would come under a federal statute known as the Employee Retirement Income Security Act, or ERISA.

ERISA was originally intended by Congress to govern the rights of pension plan beneficiaries. But legal cases morphed this legislation into protection for ERISA health plans against state-filed lawsuits based on medical malpractice.

When allegations involved both patient care and administrative decisions, some cases were not preempted by ERISA while others were—it depended on how the court interpreted what the injured party asserted. If the court decided that the lawsuit fell under ERISA, that party would be entitled only to the cost of the denied benefit (generally just the cost of the treatment or procedure in question). If ERISA did not preempt the lawsuit (or if the health plan was not governed by ERISA), the enrollee would be entitled to all remedies allowed under state law.

The landscape for these types of decisions changed in 2004, when the Supreme Court decided two cases—Aetna Health Inc. v. Davila and Cigna Corp. v. Calad—in which the patient sued for wrongful denial of coverage.

In the Calad case, Ruby Calad's physician recommended an extended hospital stay after Ms. Calad had a surgical procedure. The managed care plan, through its discharge nurse, thought the extension was unnecessary, and Ms. Calad was discharged from the hospital. Once home, she experienced postsurgical complications that required follow-up care.

In the Davila case, Juan Davila had various ailments, including diabetes, gastric ulcer disease, and arthritis. He was insured through Aetna's managed care plan. His physician, who was not in Aetna's network, recommended Vioxx (rofecoxib) for the treatment of his arthritis.

However, before allowing the use of Vioxx, Aetna required that Mr. Davila try two other medications, both less expensive than Vioxx. While on those “preferred” drugs, he experienced bleeding ulcers, internal bleeding, and a near heart attack. Because of the additional gastric impairment, he was no longer able to take medication absorbed through his stomach.

Both lawsuits eventually made their way to the Supreme Court, which decided that the lawsuits fell under ERISA and that both concerned benefits (coverage) promised to the plaintiffs. The suits were not interpreted as asserting inappropriate medical care and treatment. Therefore, the plaintiffs could seek only the benefits promised but not delivered and no other damages.

Justice Ruth Bader Ginsburg, citing the words of an appeals court judge in another case, said, “I also join 'the rising judicial chorus urging that Congress and [this] Court revisit what is an unjust and increasingly tangled ERISA regime.'” That is to say, ERISA has been interpreted to provide protections to managed care plans that were never intended.

This decision means that if a physician is named in a lawsuit together with a managed care plan, and the suit falls under the ERISA statute, the odds are great that the only exposure to both parties will be the cost of the benefit denied.

The physician might still be sued separately. But unless and until Congress revisits the ERISA statute, physicians might find that being part of an ERISA plan isn't such a bad position to be in.

[email protected]

On Dec. 12, 2007, Sen. Judd Gregg (R-N.H.) offered an amendment to a major farm-aid bill in the Senate, but it had nothing to do with aid to our nation's farmers. Sen. Gregg's amendment was called the “Healthy Mothers and Healthy Babies Rural Access to Care Act.” This bill would have limited exposure to obstetricians and gynecologists who practice in towns of 20,000 people or fewer. One provision in the bill would have capped noneconomic damages—also known as “pain and suffering”—at $250,000 for a physician and $250,000 for a health care institution. The amendment was voted down 53–41.

On Dec. 27, the Ohio Supreme Court upheld a law limiting the amount of pain and suffering damages a person can collect because of a defective product. The case involved Cincinnati property manager Melisa Arbino, who claimed that the Ortho Evra Birth Control Patch made by Johnson & Johnson caused permanent physical damage and jeopardized her fertility. According to press reports, Ohio Supreme Court Chief Justice Thomas J. Moyer said the Ohio law did not violate an injured person's right under state law to trial by jury or to a remedy for their injuries. One of the law's provisions caps awards at either $250,000 or three times the amount of economic damages, whichever is greater, up to an overall limit of $350,000. There is an exception to the cap if the person suffers permanent disability or loss of a limb or bodily organ.

On Nov. 13, 2007, trial judge Diane Larsen of the Circuit Court of Cook County (Chicago) ruled as unconstitutional the Illinois statute on capping noneconomic damages (LeBron et al. v. Gottlieb Memorial Hospital et al., No. 2006 L 012109). Because the law containing this cap has a provision that says no part of it can be considered separately from other parts, Illinois' entire medical malpractice statute was ruled unconstitutional. On Dec. 10, 2007, the defendants appealed this decision directly to the Illinois Supreme Court; a decision is expected late this year.

Judge Larsen ruled that a cap on noneconomic damages in medical malpractice cases violates the constitutional principle of separation of powers. She noted that having the Illinois legislature cap noneconomic damages “unduly encroaches upon the fundamentally judicial prerogative of determining whether a jury's assessment of damages is excessive within the meaning of the law.” In other words, the legislative branch should not interfere with the judicial branch's ability to award and determine damages; to do so is to encroach upon the powers and authority left to the judicial branch by the state constitution.

These events reflect ongoing efforts to reform medical malpractice law during at least the past 4 decades. Attempts in Congress to legislate caps on damages have been made several times by members on both sides of the aisle, and in both chambers.

All such legislation has failed, and will no doubt fail again if attempted in the future. The reason is simple: Regulating medical malpractice is a state-based function—part of a state's ability to regulate health care—and the federal government is an interloper in this arena.

Most of the action on caps has occurred at the state level. California was one of the first to enact caps with its Medical Injury Compensation Reform Act (MICRA), which became law in 1975 and is still in place. Under MICRA, noneconomic damages are capped at $250,000. Other states have enacted caps either through the state legislatures or by voter referendum, such as occurred in Texas in 2003. The Texas law, like the one in California, also caps noneconomic damages, such as pain and suffering and loss of companionship, at $250,000, although lawyers can still sue for punitive damages.

Despite these legislative successes, other states have seen caps thrown out on various grounds, often for being in violation of a state's constitution. The fact that these caps have been so controversial lends itself to a consideration of the purpose for having caps in the first place.

I have spent 35 years serving as a lawyer representing health care providers, policy makers, and legislators, and also doing research and writing in this subject area. In light of this experience (which did not include any work as a plaintiff's attorney), my conclusion is that the driving force behind capping noneconomic damages is the perceived link between enacting caps and lowering physician malpractice insurance premiums. The theory goes that without a cap, malpractice premiums would continue to rise, forcing some physicians to leave a geographic area and practice elsewhere, or even to retire prematurely.

Research has shown, however, that caps in some states have not had an effect in lowering premiums; premiums have also increased within reason, or have stayed relatively flat, in jurisdictions without any caps. There is also a cyclical element at work: Premiums have increased dramatically, over short periods of time, once every decade since the 1970s.

It is clear that the success of and the need for caps have varied. The question then becomes, has it been prudent for various state legislators to enact such caps, if there has been no uniformity across all jurisdictions over relatively long periods of time in the perceived causal link—in other words, if there has been no real proof that high verdicts and settlements (containing noneconomic damages as a major element) are the reason that physician premiums have increased so dramatically?

Caps have been enacted because of a persuasive method of advocacy known to many as the KISS (“Keep it simple, stupid”) principle. If you want to convince someone (typically, a juror) of a position, keep your point simple and straightforward. Telling legislators that in order to reduce malpractice insurance premiums, noneconomic damages must be capped is an example of KISS at work.

But in reality, increased insurance premiums are a product of complex and interrelated factors, including performance by financial markets, returns on premium dollars invested, and expected profit margins by insurers that invest in the financial markets. It may also be that these companies have a disdain for the legal profession, although it comes at the expense of patient care and those who suffer grievous injuries.

The continuing debate over capping noneconomic damages has yet to be settled, both in state and federal law. This sleeping dog has not found a resting place yet.

Update since the last issue: On Jan. 7, the Supreme Court declined to take the case of Adkins v. Christie, which dealt with confidentiality of peer review. That means that the lower court's ruling against the defendants will stand.

[email protected]

On Dec. 12, 2007, Sen. Judd Gregg (R-N.H.) offered an amendment to a major farm-aid bill in the Senate, but it had nothing to do with aid to our nation's farmers. Sen. Gregg's amendment was called the “Healthy Mothers and Healthy Babies Rural Access to Care Act.” This bill would have limited exposure to obstetricians and gynecologists who practice in towns of 20,000 people or fewer. One provision in the bill would have capped noneconomic damages—also known as “pain and suffering”—at $250,000 for a physician and $250,000 for a health care institution. The amendment was voted down 53–41.

On Dec. 27, the Ohio Supreme Court upheld a law limiting the amount of pain and suffering damages a person can collect because of a defective product. The case involved Cincinnati property manager Melisa Arbino, who claimed that the Ortho Evra Birth Control Patch made by Johnson & Johnson caused permanent physical damage and jeopardized her fertility. According to press reports, Ohio Supreme Court Chief Justice Thomas J. Moyer said the Ohio law did not violate an injured person's right under state law to trial by jury or to a remedy for their injuries. One of the law's provisions caps awards at either $250,000 or three times the amount of economic damages, whichever is greater, up to an overall limit of $350,000. There is an exception to the cap if the person suffers permanent disability or loss of a limb or bodily organ.

On Nov. 13, 2007, trial judge Diane Larsen of the Circuit Court of Cook County (Chicago) ruled as unconstitutional the Illinois statute on capping noneconomic damages (LeBron et al. v. Gottlieb Memorial Hospital et al., No. 2006 L 012109). Because the law containing this cap has a provision that says no part of it can be considered separately from other parts, Illinois' entire medical malpractice statute was ruled unconstitutional. On Dec. 10, 2007, the defendants appealed this decision directly to the Illinois Supreme Court; a decision is expected late this year.

Judge Larsen ruled that a cap on noneconomic damages in medical malpractice cases violates the constitutional principle of separation of powers. She noted that having the Illinois legislature cap noneconomic damages “unduly encroaches upon the fundamentally judicial prerogative of determining whether a jury's assessment of damages is excessive within the meaning of the law.” In other words, the legislative branch should not interfere with the judicial branch's ability to award and determine damages; to do so is to encroach upon the powers and authority left to the judicial branch by the state constitution.

These events reflect ongoing efforts to reform medical malpractice law during at least the past 4 decades. Attempts in Congress to legislate caps on damages have been made several times by members on both sides of the aisle, and in both chambers.

All such legislation has failed, and will no doubt fail again if attempted in the future. The reason is simple: Regulating medical malpractice is a state-based function—part of a state's ability to regulate health care—and the federal government is an interloper in this arena.

Most of the action on caps has occurred at the state level. California was one of the first to enact caps with its Medical Injury Compensation Reform Act (MICRA), which became law in 1975 and is still in place. Under MICRA, noneconomic damages are capped at $250,000. Other states have enacted caps either through the state legislatures or by voter referendum, such as occurred in Texas in 2003. The Texas law, like the one in California, also caps noneconomic damages, such as pain and suffering and loss of companionship, at $250,000, although lawyers can still sue for punitive damages.

Despite these legislative successes, other states have seen caps thrown out on various grounds, often for being in violation of a state's constitution. The fact that these caps have been so controversial lends itself to a consideration of the purpose for having caps in the first place.

I have spent 35 years serving as a lawyer representing health care providers, policy makers, and legislators, and also doing research and writing in this subject area. In light of this experience (which did not include any work as a plaintiff's attorney), my conclusion is that the driving force behind capping noneconomic damages is the perceived link between enacting caps and lowering physician malpractice insurance premiums. The theory goes that without a cap, malpractice premiums would continue to rise, forcing some physicians to leave a geographic area and practice elsewhere, or even to retire prematurely.

Research has shown, however, that caps in some states have not had an effect in lowering premiums; premiums have also increased within reason, or have stayed relatively flat, in jurisdictions without any caps. There is also a cyclical element at work: Premiums have increased dramatically, over short periods of time, once every decade since the 1970s.

It is clear that the success of and the need for caps have varied. The question then becomes, has it been prudent for various state legislators to enact such caps, if there has been no uniformity across all jurisdictions over relatively long periods of time in the perceived causal link—in other words, if there has been no real proof that high verdicts and settlements (containing noneconomic damages as a major element) are the reason that physician premiums have increased so dramatically?

Caps have been enacted because of a persuasive method of advocacy known to many as the KISS (“Keep it simple, stupid”) principle. If you want to convince someone (typically, a juror) of a position, keep your point simple and straightforward. Telling legislators that in order to reduce malpractice insurance premiums, noneconomic damages must be capped is an example of KISS at work.

But in reality, increased insurance premiums are a product of complex and interrelated factors, including performance by financial markets, returns on premium dollars invested, and expected profit margins by insurers that invest in the financial markets. It may also be that these companies have a disdain for the legal profession, although it comes at the expense of patient care and those who suffer grievous injuries.

The continuing debate over capping noneconomic damages has yet to be settled, both in state and federal law. This sleeping dog has not found a resting place yet.

Update since the last issue: On Jan. 7, the Supreme Court declined to take the case of Adkins v. Christie, which dealt with confidentiality of peer review. That means that the lower court's ruling against the defendants will stand.

[email protected]

On Dec. 12, 2007, Sen. Judd Gregg (R-N.H.) offered an amendment to a major farm-aid bill in the Senate, but it had nothing to do with aid to our nation's farmers. Sen. Gregg's amendment was called the “Healthy Mothers and Healthy Babies Rural Access to Care Act.” This bill would have limited exposure to obstetricians and gynecologists who practice in towns of 20,000 people or fewer. One provision in the bill would have capped noneconomic damages—also known as “pain and suffering”—at $250,000 for a physician and $250,000 for a health care institution. The amendment was voted down 53–41.

On Dec. 27, the Ohio Supreme Court upheld a law limiting the amount of pain and suffering damages a person can collect because of a defective product. The case involved Cincinnati property manager Melisa Arbino, who claimed that the Ortho Evra Birth Control Patch made by Johnson & Johnson caused permanent physical damage and jeopardized her fertility. According to press reports, Ohio Supreme Court Chief Justice Thomas J. Moyer said the Ohio law did not violate an injured person's right under state law to trial by jury or to a remedy for their injuries. One of the law's provisions caps awards at either $250,000 or three times the amount of economic damages, whichever is greater, up to an overall limit of $350,000. There is an exception to the cap if the person suffers permanent disability or loss of a limb or bodily organ.

On Nov. 13, 2007, trial judge Diane Larsen of the Circuit Court of Cook County (Chicago) ruled as unconstitutional the Illinois statute on capping noneconomic damages (LeBron et al. v. Gottlieb Memorial Hospital et al., No. 2006 L 012109). Because the law containing this cap has a provision that says no part of it can be considered separately from other parts, Illinois' entire medical malpractice statute was ruled unconstitutional. On Dec. 10, 2007, the defendants appealed this decision directly to the Illinois Supreme Court; a decision is expected late this year.

Judge Larsen ruled that a cap on noneconomic damages in medical malpractice cases violates the constitutional principle of separation of powers. She noted that having the Illinois legislature cap noneconomic damages “unduly encroaches upon the fundamentally judicial prerogative of determining whether a jury's assessment of damages is excessive within the meaning of the law.” In other words, the legislative branch should not interfere with the judicial branch's ability to award and determine damages; to do so is to encroach upon the powers and authority left to the judicial branch by the state constitution.

These events reflect ongoing efforts to reform medical malpractice law during at least the past 4 decades. Attempts in Congress to legislate caps on damages have been made several times by members on both sides of the aisle, and in both chambers.

All such legislation has failed, and will no doubt fail again if attempted in the future. The reason is simple: Regulating medical malpractice is a state-based function—part of a state's ability to regulate health care—and the federal government is an interloper in this arena.

Most of the action on caps has occurred at the state level. California was one of the first to enact caps with its Medical Injury Compensation Reform Act (MICRA), which became law in 1975 and is still in place. Under MICRA, noneconomic damages are capped at $250,000. Other states have enacted caps either through the state legislatures or by voter referendum, such as occurred in Texas in 2003. The Texas law, like the one in California, also caps noneconomic damages, such as pain and suffering and loss of companionship, at $250,000, although lawyers can still sue for punitive damages.

Despite these legislative successes, other states have seen caps thrown out on various grounds, often for being in violation of a state's constitution. The fact that these caps have been so controversial lends itself to a consideration of the purpose for having caps in the first place.

I have spent 35 years serving as a lawyer representing health care providers, policy makers, and legislators, and also doing research and writing in this subject area. In light of this experience (which did not include any work as a plaintiff's attorney), my conclusion is that the driving force behind capping noneconomic damages is the perceived link between enacting caps and lowering physician malpractice insurance premiums. The theory goes that without a cap, malpractice premiums would continue to rise, forcing some physicians to leave a geographic area and practice elsewhere, or even to retire prematurely.

Research has shown, however, that caps in some states have not had an effect in lowering premiums; premiums have also increased within reason, or have stayed relatively flat, in jurisdictions without any caps. There is also a cyclical element at work: Premiums have increased dramatically, over short periods of time, once every decade since the 1970s.

It is clear that the success of and the need for caps have varied. The question then becomes, has it been prudent for various state legislators to enact such caps, if there has been no uniformity across all jurisdictions over relatively long periods of time in the perceived causal link—in other words, if there has been no real proof that high verdicts and settlements (containing noneconomic damages as a major element) are the reason that physician premiums have increased so dramatically?

Caps have been enacted because of a persuasive method of advocacy known to many as the KISS (“Keep it simple, stupid”) principle. If you want to convince someone (typically, a juror) of a position, keep your point simple and straightforward. Telling legislators that in order to reduce malpractice insurance premiums, noneconomic damages must be capped is an example of KISS at work.

But in reality, increased insurance premiums are a product of complex and interrelated factors, including performance by financial markets, returns on premium dollars invested, and expected profit margins by insurers that invest in the financial markets. It may also be that these companies have a disdain for the legal profession, although it comes at the expense of patient care and those who suffer grievous injuries.

The continuing debate over capping noneconomic damages has yet to be settled, both in state and federal law. This sleeping dog has not found a resting place yet.

Update since the last issue: On Jan. 7, the Supreme Court declined to take the case of Adkins v. Christie, which dealt with confidentiality of peer review. That means that the lower court's ruling against the defendants will stand.

[email protected]

The case of Russell Adkins, M.D. v. Arthur Christie et al. may not sound very exciting on its face, but it could be a significant one for practicing physicians because of its potential effect on peer review.

Dr. Adkins, an African American, brought suit in federal court against the hospital where he had been practicing, as well as against its administrator and its staff physicians (all located in Georgia) for allegedly discriminating against him by summarily suspending his privileges. Dr. Adkins also alleges his privileges were not renewed because of his race, and that he was not accorded due process.

During discovery, Dr. Adkins sought documents from the hospital's peer review committee relating to peer review of all physicians at the hospital during the 7 years that he was a member of the medical staff. The defendants objected, arguing that the information that Dr. Adkins sought was privileged under Georgia's peer review statute which states: “[T]he proceedings and records of medical review committees shall not be subject to discovery or introduction into evidence in any civil action against a provider of professional health services arising out of the matters which are the subject of evaluation and review by such committee.”

Although the federal trial judge found the privilege applicable to federal civil rights actions, he disagreed with what the defendants argued, and ordered them to produce descriptions of events giving rise to peer review without producing the documents themselves.

When the defendants asked that the case be dismissed, the court inspected the documents at issue, but went ahead and dismissed the case. Dr. Adkins appealed to the 11th Circuit Court of Appeals in Atlanta, asserting the trial court improperly recognized the peer review privilege.

The appeals court decided that the privilege protecting peer review documents would not be recognized in Dr. Adkins' civil rights lawsuit, and reversed the decision of the federal court below. After a legal analysis, the court ruled on Oct. 22 that in federal law, privileges such as the one protecting peer review information from disclosure are not favored absent extraordinary circumstances, since privileges can well cloud the truth-seeking process.

In a discrimination case such as this one, protecting peer review information does not trump the right to seek the truth for an asserted violation of a person's—in this case, a physician's—civil rights. At the same time, the U.S. Supreme Court has recognized the psychotherapist-patient privilege in one of its own decisions.

The conundrum raised by the 11th Circuit's opinion is not in adding to the “mushiness” of federal decisions addressing when and under what circumstances a peer review privilege should be recognized, but in its failure to recognize how the peer review statute will be applied and interpreted by a state judge considering the very same privilege in light of the same or a quite similar case—for example, civil rights or antitrust cases—that was filed understate law.

Regulating health care is state based. Congress has never enacted a federal peer review statute and has never announced its intention to do so.

Moreover, peer review statutes were created to further health care within a particular state by enabling physicians in that state to freely and candidly discuss and review medical care within their institutions and hospitals—thus policing themselves. Consequently, since health care is state based and since regulation of that care is state based, then the interpretation and application of the privilege against disclosure of peer review materials by a federal court should be gleaned from how a state court would use the privilege in the same or similar circumstances.

If the particular state peer review statute does not allow for any disclosure, then a federal court should do the same analysis; if a state court “balances” various factors, for example, to first look at the peer review information before allowing it to be disclosed or limiting the time period when the documents were created, then, likewise, a federal court should arrive at the same result. In the end, health care does not change simply because an aggrieved party, like Dr. Adkins, sues in a federal court, and not in a state court.

After the appeals court ruled against them, the defendants in the Adkins case asked the U.S. Supreme Court to take on the case; on January 7, the court said it would not do so. Had it accepted the Adkins case, the Supreme Court would have had a real opportunity to instruct its lower federal courts that when confronting the protections afforded by a state peer review statute, they should look to how the state statute is interpreted by the state courts in which the federal court sits. With this approach, there would be uniformity in application by all courts throughout both the federal and state systems of jurisprudence.

As it now stands, physicians should continue to note that if they serve on peer review committees, they should be guided by the protections provided in their respective state peer review law. A member of such a committee must realize, however, that the information generated by a peer review committee may well not be privileged from disclosure if the request for information arises from a lawsuit in a federal court.

[email protected]

The case of Russell Adkins, M.D. v. Arthur Christie et al. may not sound very exciting on its face, but it could be a significant one for practicing physicians because of its potential effect on peer review.

Dr. Adkins, an African American, brought suit in federal court against the hospital where he had been practicing, as well as against its administrator and its staff physicians (all located in Georgia) for allegedly discriminating against him by summarily suspending his privileges. Dr. Adkins also alleges his privileges were not renewed because of his race, and that he was not accorded due process.

During discovery, Dr. Adkins sought documents from the hospital's peer review committee relating to peer review of all physicians at the hospital during the 7 years that he was a member of the medical staff. The defendants objected, arguing that the information that Dr. Adkins sought was privileged under Georgia's peer review statute which states: “[T]he proceedings and records of medical review committees shall not be subject to discovery or introduction into evidence in any civil action against a provider of professional health services arising out of the matters which are the subject of evaluation and review by such committee.”

Although the federal trial judge found the privilege applicable to federal civil rights actions, he disagreed with what the defendants argued, and ordered them to produce descriptions of events giving rise to peer review without producing the documents themselves.

When the defendants asked that the case be dismissed, the court inspected the documents at issue, but went ahead and dismissed the case. Dr. Adkins appealed to the 11th Circuit Court of Appeals in Atlanta, asserting the trial court improperly recognized the peer review privilege.

The appeals court decided that the privilege protecting peer review documents would not be recognized in Dr. Adkins' civil rights lawsuit, and reversed the decision of the federal court below. After a legal analysis, the court ruled on Oct. 22 that in federal law, privileges such as the one protecting peer review information from disclosure are not favored absent extraordinary circumstances, since privileges can well cloud the truth-seeking process.

In a discrimination case such as this one, protecting peer review information does not trump the right to seek the truth for an asserted violation of a person's—in this case, a physician's—civil rights. At the same time, the U.S. Supreme Court has recognized the psychotherapist-patient privilege in one of its own decisions.

The conundrum raised by the 11th Circuit's opinion is not in adding to the “mushiness” of federal decisions addressing when and under what circumstances a peer review privilege should be recognized, but in its failure to recognize how the peer review statute will be applied and interpreted by a state judge considering the very same privilege in light of the same or a quite similar case—for example, civil rights or antitrust cases—that was filed understate law.

Regulating health care is state based. Congress has never enacted a federal peer review statute and has never announced its intention to do so.

Moreover, peer review statutes were created to further health care within a particular state by enabling physicians in that state to freely and candidly discuss and review medical care within their institutions and hospitals—thus policing themselves. Consequently, since health care is state based and since regulation of that care is state based, then the interpretation and application of the privilege against disclosure of peer review materials by a federal court should be gleaned from how a state court would use the privilege in the same or similar circumstances.

If the particular state peer review statute does not allow for any disclosure, then a federal court should do the same analysis; if a state court “balances” various factors, for example, to first look at the peer review information before allowing it to be disclosed or limiting the time period when the documents were created, then, likewise, a federal court should arrive at the same result. In the end, health care does not change simply because an aggrieved party, like Dr. Adkins, sues in a federal court, and not in a state court.

After the appeals court ruled against them, the defendants in the Adkins case asked the U.S. Supreme Court to take on the case; on January 7, the court said it would not do so. Had it accepted the Adkins case, the Supreme Court would have had a real opportunity to instruct its lower federal courts that when confronting the protections afforded by a state peer review statute, they should look to how the state statute is interpreted by the state courts in which the federal court sits. With this approach, there would be uniformity in application by all courts throughout both the federal and state systems of jurisprudence.

As it now stands, physicians should continue to note that if they serve on peer review committees, they should be guided by the protections provided in their respective state peer review law. A member of such a committee must realize, however, that the information generated by a peer review committee may well not be privileged from disclosure if the request for information arises from a lawsuit in a federal court.

[email protected]

The case of Russell Adkins, M.D. v. Arthur Christie et al. may not sound very exciting on its face, but it could be a significant one for practicing physicians because of its potential effect on peer review.

Dr. Adkins, an African American, brought suit in federal court against the hospital where he had been practicing, as well as against its administrator and its staff physicians (all located in Georgia) for allegedly discriminating against him by summarily suspending his privileges. Dr. Adkins also alleges his privileges were not renewed because of his race, and that he was not accorded due process.

During discovery, Dr. Adkins sought documents from the hospital's peer review committee relating to peer review of all physicians at the hospital during the 7 years that he was a member of the medical staff. The defendants objected, arguing that the information that Dr. Adkins sought was privileged under Georgia's peer review statute which states: “[T]he proceedings and records of medical review committees shall not be subject to discovery or introduction into evidence in any civil action against a provider of professional health services arising out of the matters which are the subject of evaluation and review by such committee.”

Although the federal trial judge found the privilege applicable to federal civil rights actions, he disagreed with what the defendants argued, and ordered them to produce descriptions of events giving rise to peer review without producing the documents themselves.

When the defendants asked that the case be dismissed, the court inspected the documents at issue, but went ahead and dismissed the case. Dr. Adkins appealed to the 11th Circuit Court of Appeals in Atlanta, asserting the trial court improperly recognized the peer review privilege.

The appeals court decided that the privilege protecting peer review documents would not be recognized in Dr. Adkins' civil rights lawsuit, and reversed the decision of the federal court below. After a legal analysis, the court ruled on Oct. 22 that in federal law, privileges such as the one protecting peer review information from disclosure are not favored absent extraordinary circumstances, since privileges can well cloud the truth-seeking process.

In a discrimination case such as this one, protecting peer review information does not trump the right to seek the truth for an asserted violation of a person's—in this case, a physician's—civil rights. At the same time, the U.S. Supreme Court has recognized the psychotherapist-patient privilege in one of its own decisions.

The conundrum raised by the 11th Circuit's opinion is not in adding to the “mushiness” of federal decisions addressing when and under what circumstances a peer review privilege should be recognized, but in its failure to recognize how the peer review statute will be applied and interpreted by a state judge considering the very same privilege in light of the same or a quite similar case—for example, civil rights or antitrust cases—that was filed understate law.

Regulating health care is state based. Congress has never enacted a federal peer review statute and has never announced its intention to do so.

Moreover, peer review statutes were created to further health care within a particular state by enabling physicians in that state to freely and candidly discuss and review medical care within their institutions and hospitals—thus policing themselves. Consequently, since health care is state based and since regulation of that care is state based, then the interpretation and application of the privilege against disclosure of peer review materials by a federal court should be gleaned from how a state court would use the privilege in the same or similar circumstances.

If the particular state peer review statute does not allow for any disclosure, then a federal court should do the same analysis; if a state court “balances” various factors, for example, to first look at the peer review information before allowing it to be disclosed or limiting the time period when the documents were created, then, likewise, a federal court should arrive at the same result. In the end, health care does not change simply because an aggrieved party, like Dr. Adkins, sues in a federal court, and not in a state court.

After the appeals court ruled against them, the defendants in the Adkins case asked the U.S. Supreme Court to take on the case; on January 7, the court said it would not do so. Had it accepted the Adkins case, the Supreme Court would have had a real opportunity to instruct its lower federal courts that when confronting the protections afforded by a state peer review statute, they should look to how the state statute is interpreted by the state courts in which the federal court sits. With this approach, there would be uniformity in application by all courts throughout both the federal and state systems of jurisprudence.

As it now stands, physicians should continue to note that if they serve on peer review committees, they should be guided by the protections provided in their respective state peer review law. A member of such a committee must realize, however, that the information generated by a peer review committee may well not be privileged from disclosure if the request for information arises from a lawsuit in a federal court.