Consumer Watchdog – Couple Battle To Make Insurers Liable For Coverage Decisions

Surrounded by supporters, Hilda Sarkisyan marched into Cigna Corp.’s Philadelphia headquarters on a chilly fall day, 10 months after the company refused to pay for a liver transplant for her daughter.

"You guys killed my daughter," the diminutive San Fernando Valley real estate agent declared at the lobby security desk. "I want an apology."

What she got was something quite different.

Cigna employees, looking down into the atrium lobby from a balcony above, began heckling her, she said, with one of them giving her "the finger." Sarkisyan walked out, stunned and hurt.

"They showed me their true colors," she said. "Shame on them."

Cigna later apologized for the 2008 incident, but it has now become -- unintentionally -- the central element of a lawsuit Sarkisyan and her husband, Grigor, are pressing against the health insurer.

The suit began as a wrongful-death complaint, with the couple contending that Cigna's refusal to cover the transplant led to Nataline's death Dec. 20, 2007, in a case that drew national media attention.

A Los Angeles judge threw out the wrongful-death complaint, saying it was barred by a 1987 U.S. Supreme Court ruling that shields employer-paid healthcare plans from damages over their coverage decisions.

But U.S. District Judge Gary Allen Feess said the Sarkisyans could pursue damages for any emotional distress caused by the Philadelphia incident.

The ruling was bittersweet for the Sarkisyans and patient advocates, who say it points to the need for federal legislation to allow people to sue health insurers for the life-or-death decisions they make.

"They kill a beautiful 17-year-old girl, and I get to go after them for a finger? That's sick," Hilda Sarkisyan said.

The Sarkisyans contend that Cigna improperly refused the transplant that Nataline's UCLA physicians said at the time was urgently needed to save her life, and that the company reflexively issued a denial letter without looking into the specific circumstances.

The company said at the time that, for Nataline, the operation would have been "experimental" and was not covered. Nine days later, amid a storm of publicity, Cigna agreed to cover the transplant.

It was too late. Nataline died hours later.

"It was the worst thing in life," Hilda Sarkisyan said in a recent interview.

Mark Geragos, the high-profile trial lawyer who helped the family make its pleas to Cigna while Nataline was alive, filed the wrongful death suit on the family's behalf last year.

"If you don't sue, you can't make changes," Hilda Sarkisyan said. "It's not about the money. It's about the principle. They are just going to keep denying people care if we don't stop them."

Cigna said the dismissal of the wrongful-death case in April showed that the court "agreed with our position that the Sarkisyans' claims regarding Cigna's decision making were without merit."

In fact, the court did not consider the merits of the family's wrongful-death claims. Instead, it decided those claims could not be heard.

Judge Feess cited rulings by the Supreme Court and others interpreting 1974's Employee Retirement Income Security Act, or ERISA, which governs employee retirement funds and benefit plans.

Under ERISA, the courts have said, the only monetary damages that beneficiaries of workplace health plans can sue for is the cost of the treatment of service in dispute.

The cost of mounting a lawsuit often far exceeds the cost of the treatment in question, patient lawyer Scott Glovsky said. As a result, few lawyers take them on. That has in effect shut the courthouse doors on most treatment coverage disputes involving workplace health plans, which are the source of medical insurance for 132 million workers and dependents.

"ERISA is a license to kill," Glovsky said. "The companies know that they can deny treatment with the sick or dead member having virtually no recourse."

Wendell Potter, a Cigna spokesman who quit after handling the publicity surrounding the Sarkisyan case, agreed.

"HMOs and insurers are largely free to deny access to care without fear of reprisal or financial consequences," Potter said in a speech to the Civil Justice Foundation in San Francisco.

But, without these limits, an industry spokesman said suits against health insurers could be disastrous for consumers.

"It will bankrupt these plans, and employers would no longer be able to offer coverage," said Robert Zirkelbach, a spokesman for America's Health Insurance Plans.

With Congress considering a healthcare overhaul -- including a requirement that individuals buy health insurance -- Potter, the Sarkisyans and their supporters want lawmakers to undo the high court's 1987 ERISA ruling.

Santa Monica-based Consumer Watchdog sent a letter to key congressional leaders urging them to undo the ERISA ruling, and president Jamie Court said Nataline's case shows why such a move is crucial to any healthcare reform.

"If the insurer decides they don't want to pay for the treatment because they can save a lot of money, there is not a dime available in damages if the person dies or is injured," Court said. "It's cheaper to kill you. If you die, you can't go to court."

It's not the first time this aspect of ERISA has come under fire.

In 2001, the late Sen. Edward M. Kennedy led an unsuccessful effort to take away the protection for health insurers.

"Patients should have the right to hold their HMO accountable in court when its negligence causes the injury or death of a patient," Kennedy told Senate colleagues. "No other industry in America enjoys immunity from accountability for its actions, and the insurance industry does not deserve it either."

"I want to get rid of this ERISA law," Hilda Sarkisyan said, "and replace it with Nataline's law."

Meanwhile, the Sarkisyans filed a new suit over the lobby incident this month. Cigna said in a statement that the case is "without merit," and that the company expects to prevail.

About a month after the incident, the Sarkisyans received a letter of apology from a Cigna executive.

"I was very disappointed to learn of the behavior of one of our employees when you were at our company's headquarters," wrote John M. Murabito, executive vice president for human resources.

"I sincerely regret this individual's offensive and inappropriate action," he continued. "Please know that he did not represent the views of our company or the views of other employees who work here. We deeply empathize with you and wish you peace and comfort in your loss."

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Contact the author at: lisa.girion@latimes.com