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Holding Health Insurers Accountable

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One hundred and thirty-two million Americans receive health insurance in whole or part through a private-sector employer. In 1987 the Supreme Court ruled in Pilot Life v. Dedeaux that if the health insurer screws up a claim for these insured, even if it results in death or catastrophic injury, they are out of luck and cannot recover damages.

Americans who get their health insurance by paying on their own or through the government, as employees or Medicare recipients, can sue for damages, but not the lost class of those who get coverage through a private employer.

The ruling hinged on a misreading of an arcane law called the Employee Retirement Income Security Act (ERISA), and it superceded state common law under which Americans generally could take their health insurer to court for bad faith in mishandling claims.

The practical efforts have been devastating. Health insurers know that in most cases they won’t be accountable, even if their wrongful denial of care kills a patient. So why would insurers ever quickly approve expensive care if there was no financial penalty for denying it? What if a bank robber faced no penalty?

This is the dirty little secret of why health insurers today give Americans such a hard time.  Consumer Watchdog is working to reverse the Supreme Court decision and restore accountability for all health insurance companies.

 

Real Patients, Real Harm

Due to the lack of legal accountability, HMOs and insurers are largely free to deny access to care without fear of reprisal or financial consequences.

That was the case for Patrick Gannon, whose story was featured by NBC’s Dateline on January 24, 2010. Gannon suffered two strokes and cardiac arrest at 42, just as he was about to become a first-time father. Blue Shield of California denied Patrick the timely therapy he needed to have a strong chance at recovery. It even refused to cover a bed and lift that would enable his parents to care properly for him at home.

The injustice of the current system was also dramatized by the story of teen-age Nataline Sarkisyan, who died after CIGNA denied her a potentially life-saving liver transplant. Another patient, Ephram Nehme, was allowed to sue his insurer, Blue Cross, for denying a liver transplant because Ephram had bought his policy on his own, while Nataline's parents could not hold their insurer accountable because Nataline's health insurance was paid for by her dad's employer.

Another tragic story of the lack of equal justice is that of Florence Corcoran.

Corcoran’s health insurer, United Healthcare, “let a clerk thousands of miles away make a life-threatening decision about my life and my baby’s life without even seeing me and overruled five of my doctors,” said Florence Corcoran. It is a story that echoes so many tragedies recounted in Consumer Watchdog president Jamie Court’s book, Making a Killing.

But as with many of the other stories, there’s a twist — a second tragedy. “They don't get held accountable. And that’s what appalls me. I relive that all the time. Insurance companies don’t answer to nobody.”

 

Resources:

Former CIGNA executive, Wendell Potter, describes how his former employer denied Nataline Sarkisyan a potentially life-saving liver transplant.

Wendell Potter on Bill Moyers' Journal discussing the financial incentives on health insurers to deny care and the need for legal liability reform.