Tuesday, June 22, 2004

Patients should be able to sue HMOs in state courts

Why you're right:

1. Allowing HMOs to be sued in state court would give HMOs the right incentives. It is always in an HMO's short-term financial interests to deny medical treatment. Allowing patients to sue HMOs in state court balances those incentives with significant financial penalties if an HMO's decision to deny treatment results in an adverse medical result. In federal court, plaintiffs are less likely to recover for their injuries - and when they do recover they recover less. As a result, when federal courts is the only option for plaintiffs, HMOs don't have to be as concerned about making the right decisions. (Washington Post)

2. Allowing HMOs to be sued in state court subject HMOs to punitive damages. Only state courts make punitive damages available to plaintiffs. Compensatory damages, the only type available in federal court, provide redress to the person that suffered an injury. But only punitive damages are specifically intended to deter the activity from happening again. Each time an HMO is successfully sued in state court it make it less likely that HMOs will deny medically necessary treatment again. (Word IQ)

Why they're wrong:

1. HMOs are very profitable even when subject to state law suits. Last year – before the Supreme Court ruled that patient's couldn't sue in state court – HMO profits were up 52%. In the first three quarters of 2003 the industry racked up $6.7 billion in profits. (CBS Market Watch)

2. Federal Courts are severely overcrowded. Prohibiting state courts as a forum for suits against HMOs will put more even more stress on federal courts. But federal courts are already overburdened. There are over 34,000 cases that have been pending in federal court for over three years. (Federal Court Management Statistics)

A better idea:

The recent Supreme Court decision prohibiting patients from suing HMOs in state court based on a federal law. Congress should amend the law to allow patients to file state suits.