How claims are handled depends on whether the
policyholder can sue
Date: October 14, 1998 8:56 AM
Consumer Groups Eye Insurance Video
BYLINE: LAURA MECKLER
AP-HMO-Lobbying ,0688
DATELINE: WASHINGTON
BODY:
Consumer groups, promising to renew a fight against HMOs, have found
new evidence they hope will boost their case that patients need more
protections.
The issue is whether patients should have the right to sue an insurance
company that makes a damaging error. The evidence is an Aetna training
video that implies the company gives more attention to cases in which
patients already have that right.
''We released this to fuel the HMO debate and to tell Congress it's
absolutely outrageous that they would adjourn without dealing with
this,'' said Jamie Court of Consumers for Quality Care, which has lobbied
for the ''patients' bill of rights.''
Consumer groups have long argued that insurance companies will be less
likely to deny legitimate claims if they fear a big jury verdict. This
week, Court's group is sending a transcript of the video to every member
of Congress.
Lawmakers are set to adjourn without sending President Clinton any HMO
legislation despite support from the president and some Republicans.
Their biggest disagreement was whether to give 125 million Americans the
right to sue.
Those 125 million people are enrolled in plans regulated by the Employee
Retirement Income Security Act, or ERISA. Courts have said the federal
law does not allow lawsuits for damages.
So if an HMO denies a lung X-ray, and it turns out the patient had
undetected lung cancer, the patient can sue to recover the cost of the
X-ray, but cannot win money for the damage caused by delay.
In the Aetna video, company attorneys are training case managers in how
to handle claims. The topic is long-term disability claims, not health
insurance, but the company says its policies do not differ.
Throughout the video, Aetna attorneys discuss the differences between
ERISA and non-ERISA cases those where the company faces federal rules
that prohibit lawsuits, and those governed by state laws that allow
suits.
At one point, company attorney Jeffrey Blumenthal is explaining the
importance of having accurate information in determining whether to deny
a claim when a wrong decision could lead to a big judgment.
''We have an obligation, certainly in a non-ERISA setting, under state
law, to conduct what's called a reasonable investigation,'' he says. ''We
could be subject to ... bad faith damages, to punitive damages, to a
whole range of extra-contractual liability that could be many, many
millions of dollars.''
Consumer advocates say the video, which became public in an Alaska
lawsuit against Hartford, Conn.-based Aetna, demonstrates that the
company treats customers who can sue differently from those who can't.
''The lawyers are implicitly and explicitly saying patients with
different types of liability exposures should be treated differently,''
said Court, whose group has for months been spotlighting patients harmed
by HMOs but unable to collect damages.
Aetna spokesman Fred Laberge said the company does put more time and
money into cases not governed by the federal law that is, ''non-ERISA
cases'' but only as part of the legal review that follows an initial
decision whether to pay a claim.
But he called the extra effort ''an enhanced layer of review'' necessary
to navigate differing laws across the states.
''It's a matter of committing our resources where they're needed to
conform with legal compliance standards,'' Laberge said.
All cases get adequate attention from company officials who determine, on
the merits, whether to pay for a certain insurance claim, Laberge said.
And he said the differences do not affect whether a claim will be paid.
Congress this year failed to pass any HMO legislation, but Democrats in
Congress are already pouncing on the video, looking toward next year.
Rep. Pete Stark, D-Calif., said he plans to use the video against the
insurance industry.
''We'll get it and play it at a hearing and ask Aetna to come in,'' he
said.
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Created: October 16, 1998
Last Updated: May 28, 2000