Denied HMO coverage? ERISA law limits legal action
Web posted at: 3:36 p.m. EDT (1936 GMT)
From CNN Correspondent Brooks Jackson
CHARLOTTE, North Carolina (CNN) -- Born with cerebral palsy, Ethan Bedrick needed extensive therapy, according to his doctors. But his health plan said "no."
"We just feel like it was sort of like saying 'just go in the corner and be a vegetable,'" said Ethan's father, Richard Bedrick.
Ethan's doctors said he was making progress, and one even said he might walk if given therapy twice a week. But the health plan's doctor allowed just 15 therapy sessions per year.
"I was appalled, for someone who has never met, examined or seen Ethan to tell me he is not [able to be] rehabilitated," said Patricia Bedrick.
That doctor did not examine Ethan and had practically no experience treating cerebral palsy.
"They were basically throwing up their hands up and saying 'it's a no-win situation, let's give up,'" said Patricia.
The Bedricks didn't give up. They took their health plan to court, but discovered their way was blocked by an obscure federal law.
ERISA, the Employment Retirement Income Security Act of 1974, is a pension law, but it also protects health plans from lawsuits. Forty-six percent of all Americans are in health care plans covered by ERISA.
"You can not go to small claims court, or you can not go to your local state court to try to get a quick resolution of your claim," said Ethan's lawyer, David Kirby.
ERISA allows suits only in federal court -- an expensive option -- and no punitive damages are allowed.
"It's a situation where all the cards are stacked in favor of the health insurance companies," Kirby said.
Ethan's case was thrown out of state court and lost in federal court. But on appeal, he won a rare victory.
The health plan said denying therapy was reasonable since its doctors thought Ethan had little chance of progress.
But three Federal appellate judges called that reasoning "simply revolting" and baseless, saying, "we think it abundantly clear that (the doctor) put the financial interest of Travellers above her fiduciary duty to Ethan."
Travellers had no comment. The company, now part of United HealthCare is paying for Ethan's therapy under court order.
"He now can stand in the stander an hour and a half on a daily basis, and his body seems to be able to tolerate it," said Patricia Bedrick. "So every day he becomes stronger."
But the case took 400 hours of legal work, or $75,000 in legal fees only partly paid by the health plan.
The Bedricks are prosperous business owners, but few others could afford such a case.
In Congress, Democrats are pushing a bill to allow damage suits; the Republican leadership is opposed, and so is the managed care industry.
"Now the trial lawyers would like to decide coverage questions, without a doubt," said Karen Ignagni, of the American Association of Health Plans. "And what we would have is a litigation lottery.All the coverage questions would be thrown into court."
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