HMO Held Liable for Refusing Coverage (Wall Street Journal)

THE WALL STREET JOURNAL
HMO Held Liable for Refusing Coverage

By ELLEN JOAN POLLOCK
Staff Reporter of THE WALL STREET JOURNAL

A jury has awarded more than $12 million to the estate of a woman whose health maintenance organization refused to pay for a bone marrow transplant to treat her breast cancer.

The verdict against the Health Net HMO is likely to attract the attention of other HMOs and insurers, many of which are grappling with whether to cover this and other expenses and controversial treatment. One lawyer suggested that the case, believed to be the first involving the issue to be tried by a jury, may be a harbinger of potential problems with managed care efforts to limit treatments.

Bone marrow transplants, routinely used to treat diseases such as leukemia, increasingly have been used for breast cancer as well. Many insurers and HMOs argue that the treatment is experimental and refuse to cover it. But women’s advocacy groups counter that insurers simply don’t want to pay for the treatments.

A growing number of women have gone to court to ask judges to intervene in their coverage disputes in an emergency basis, but many of these motions have been settled out of court. The case decided last week in Riverside, Calif. is significant because it was tried before a jury. The Superior Court jury found that Health Net, a Woodland Hills, Calif., unit of HN Management Holdings had acted in bad faith, breached its contract and recklessly inflicted emotional distress. The plaintiff, Nelene Fox, died in April and the case was continued by her husband and estate.

Mark Hiepler, the Oxnard, Calif. attorney for the Fox family and Nelene Fox’s brother, says the decision “is a real indictment on managed care.” During the almost monthlong trial, he says, he presented the case that the Health Net executive who made the decision not to cover Ms. Fox’s treatment was compensated partly on the basis of how much money he saved the company.

“You put doctors in positions of conflict, and you reward them for not treating patients,” Mr. Hiepler claimed. After Health Net denied her coverage, Ms. Fox and her family raised money for the treatment through bake sales and other means. The jury also ordered Health Net to reimburse Ms. Fox’s husband $212,000 for the cost of her treatment.

Rita Duarte, an executive vice president of Health Net, said she could not comment on the case because it is still in litigation.

The jury today is expected to consider how much. If anything it will award in punitive damages, which are designed to punish and deter egregious wrongdoing.

L. Susan Slavin, a Hempstead, N.Y. attorney who founded the Breast Cancer Legal Advocacy Project, which is affiliated with the American Bar Association, heralded the jury verdict. “Hopefully it send a clear signal to the Insurance industry nationwide… to re-evaluate their position,” she said.