September 2000

SOME GOOD MANAGED CARE NEWS

David L. Trueman, Esq, PhD

          As many of you know, I am a psychologist who became an attorney, in large part, to fight managed care abuses. I write this article to update you about some good managed care news! As an attorney, I sue HMOs and managed care companies when individuals are injured or die because of wrongful denials of benefits. There are many uncertainties in litigating against HMOs, including whether an HMO can be sued in New York. My good news is that I recently received a decision in New York - the first of its kind - that allows us to go ahead with our $700 million dollar negligence and gross negligence suit against Aetna/U.S.Healthcare.

The case involves the attempts by Robert Payton, a 42 year old attorney, who had periodic difficulty with drug use, to overcome the problems that had plagued and almost killed him. In January 1998, Mr. Payton accidentally overdosed and, as a result, was in a coma for eleven days, near death. After regaining consciousness, he apparently was so terrified at almost dying he wanted to be transferred to an in-patient rehabilitation facility. He called Aetna/U.S.Healthcare but they refused to approve him. For the next three weeks he attempted to obtain approval but was told that he did not have coverage despite what his policies seemed to him to clearly state. He filed a grievance and in March received a letter from a grievance committee stating that he possessed in-patient mental health as well as substance abuse benefits. Strangely, however, even though the committee met because Mr. Payton was complaining that he could not obtain approval for treatment, the committee stated it had no record of any requests for care! 

Still unable to have anyone make a decision on his request for treatment, Mr. Payton grieved the grievance committee’s ruling. In May, he received notification from another grievance committee once again stating that he possessed in-patient coverage for mental health as well as substance abuse treatment. However, that committee stated it could not consider his requests for treatment because he had not been denied at the appeals level!

Mr. Payton was dumbfounded. In what must have seemed to him to be a Kafka novel turned worse, he once again called Aetna but could not obtain preauthorization for treatment. He grieved the grievance committee’s decision and in June received a letter from a third committee.  However, this time he was told that in-patient rehabilitation was excluded from his coverage since he had failed to purchase a “rider.” There was no mention of a “rider” in any previous communication nor in the contract itself. Mr. Payton challenged the decision and believed it was as an attempt to cover up for the failure to previously approve treatment. He also contacted the New York State Attorney General’s Managed Care Bureau which wrote to Aetna/U.S.Healthcare on August 7 supporting Mr. Payton’s claims: ‘[w]e are unable to understand the basis for your denial.  Mr. Payton’s contract plainly covers in-patient substance abuse rehabilitation.’ On August 25, a fourth committee met, albeit in Mr. Payton’s absence, and “recommended approval of coverage for...in-patient chemical dependency rehabilitation.” Tragically, unbeknownst to anyone, Mr. Payton had died in his apartment on August 17 of an accidental overdose while, ironically, in the middle of writing a letter to the committee.

The family came to me and we filed suit. Although New York courts had decided a few HMO cases, none had really addressed the issues around the wrongful denial of benefits as this one. Therefore, this case would “make law” in New York and indicate whether people could sue HMOs for injury or death caused by a company’s wrongful delays or denials.  Additionally, since there is no HMO liability law in New York specifically allowing for suits against HMOs, this case would tell whether one was really necessary.

The company moved to dismiss all of the complaint except the claim for breach of contract, saying that this was “merely a coverage dispute” and only a “simple breach of contract.” In a decision with far-reaching consequences for consumers, Judge Cahn ruled that the suit could go forward on many of its claims against Aetna/U.S.Healthcare because “[I]ncidents of significant apparently unwarranted delay and confusion in the processing of [Mr. Payton’s] requests for coverage and [his] appeal and in the instructions given to [him] ... may be found . . . to give rise to an inference of reckless disregard for [his] health and well-being.” In the most significant part of the decision, the judge ruled that an HMO must use a higher level of care when considering requests by its consumers. In the context of a consumer who has purchased a “health care policy with an HMO...the HMO should be held to a high standard in the manner in which it executes its...obligations... This is especially so, because the consumer, as occurred here, often needs immediate hospitalization or admission to a medical or rehabilitative facility. USHC is undoubtedly aware of the precarious health conditions involving the holders of its policies. Thus, it may be implied to have undertaken a duty of acting in its decision making function with a high degree of care.

We are now moving forward toward trial. I will keep you posted on developments in this case. I am looking for other test cases, including ones outside New York.  If you know of any tragic cases where someone was injured or killed because of a wrongful denial of benefits, please contact me. Aside from medical cases, as when someone needs a transplant and the HMO refuses, I am interested in cases where the company has interfered with mental health or substance abuse treatment; for example, where an individual attempted or committed suicide or an adolescent ran away after not being able to obtain treatment or hospital admission or was forced out of a facility prematurely.

If you would like more information, any of my writings, or have any comments, questions, or suggestions for future articles, please contact me at: 221 Mineola Boulevard, Mineola, NY 11501, (516) 742-1460 or 18 East 50th Street - 7th Floor, New York, NY 10022, (212) 758-0993.   Also, please visit my “Fighting Managed Care Abuses” website at www.truemanlaw.com.

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