NCPA - National Center for Policy Analysis

You Can Sue Your HMO

May 23, 2000

Can you sue your HMO? Some state and federal lawmakers want to expand the civil tort liability of Health Maintenance Organizations (HMOs) because of some specific cases where HMO members were not able to sue their HMO for alleged medical malpractice. Lawmakers claim HMO members are not allowed to sue their HMO. However, such claims are incorrect.

Currently, when health benefits are provided by an employer (and most are), the decisions made by HMOs are covered by the Employee Retirement Income Security Act (ERISA), the federal law governing employer-based health plans.

Under ERISA, litigation regarding these plans' decisions can only be filed in federal courts, because ERISA preempts state laws.

However, on questions regarding the quality of the medical services or care provided as opposed to the denial of benefits under a plan, the clear trend has been to allow suits regarding medical quality issues in state courts.

  • Since 1995 the federal courts have expanded state court jurisdiction over these claims by narrowing the limitation that such cases be filed in federal court.
  • At least three U.S. Circuit Courts of Appeal -- covering 12 states and one territory -- and 13 District Courts have allowed state court cases on quality of care issues.
  • Only those cases involving the improper administration of a plan remain solely cases for the federal courts.

Rather than expand liability, some states and groups are working on more effective ways of improving health care quality, such as requiring physicians to publicly disclose their history regarding malpractice cases.

Some experts advocate better education of beneficiaries regarding health plan provisions, such as appeals processes, so that their expectations are in line with actual provisions of the contract with the HMO.

Source: William G. Schiffbauer, "Can Civil Tort Liability Lawsuits Improve Health Care Quality?" BNA's Health Care Policy Report, March 6, 2000.


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