How claims are handled depends on whether the
policyholder can sue

   Date: October 14, 1998 8:56 AM
   Consumer Groups Eye Insurance Video
   AP-HMO-Lobbying ,0688
       Consumer groups, promising to renew a fight against HMOs, have found
   new evidence they hope will boost their case that patients need more
   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
   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
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Created: October 16, 1998
Last Updated: May 28, 2000