July 12, 2001 - Bill Authorizing Malpractice Suits Against HMOs Awaits NJ Gov's
New Jersey might be next to join the small but growing number of states that allow malpractice suits against health maintenance organizations and other managed care providers. The measure would amend a 1973 state statute that shields HMOs from liability for negligence, misfeasance, nonfeasance or malpractice on the basis that they are not making medical decisions.
The law creates seven categories of harm for which an HMO can be held liable: death; serious and long-term impairment of a bodily function or system; loss of a necessary organ; loss of a member; exacerbation of a serious or life-threatening disease or condition; chronic pain conditions; or other substantial physical or mental harm.
The Health Care Carrier Accountability Act was passed on June 28 and is expected to be signed by the governor in the nearest future. If passed, it will render carriers liable for serious harm caused by denial of or delay in authorizing medical services. However, the law applies only to state-regulated health plans, which cover about 3.1 million residents. Employers and unions are exempt from liability.
Before filing suit based on the sixth and seventh categories, patients must exhaust an administrative appeals process: the Independent Health Care Appeals Program. The bill declares that because "carriers are in many instances making medical decisions," they "should be held to the same level of legal responsibility as physicians and health care providers." The day the bill passed, Acting Gov. Donald DiFrancesco announced his intent to sign it, and spokeswoman Rae Hutton said he will do so in the next week or two. It will go into effect 90 days later.
The new right-to-sue law makes a carrier liable for the acts of its employees, agents and representatives when it has influenced or controlled those acts or has the right to do so. A Department of Health and Senior Services report on the appeals program shows that from March 15, 1997, to Jan. 15, 2001, 386 health-care appeals were resolved and the panel found against the carrier in 176 of the cases, or almost 46 percent of the time. The insurer accepted the panel's recommendation in all but 25 of the cases.
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