Gripe With Your HMO? Don't Tell It to the Feds

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Cases against HMOs have their place — but it's not in federal court. In a unanimous decision, the Supreme Court ruled Monday that health maintenance organizations cannot be sued under federal law. And while HMOs viewed the decision with jubilation, it hardly heralds the end of anti-HMO litigation; the Justices' opinion left the door wide open for cases to be heard in state courts.

The case in question, brought by Cynthia Herdrich of Bloomington, Ind., was first filed seven years ago, and focused on the monetary incentives HMOs offer to member physicians who find ways to avoid costly procedures. In 1992, Herdrich was forced to wait eight days for an ultrasound after doctors found a mass in her abdomen; according to her HMO, Herdrich's condition was not an emergency. Her appendix ruptured and necessitated emergency surgery, as well as several rounds of antibiotics. Herdrich sued her doctor in state court for monetary damages, and collected $35,000; she then sued her HMO under a federal law that regulates how employers distribute health benefits, charging that the organization's financial incentives encouraged doctors to withhold necessary treatments — and won her case in lower courts.

Monday's decision reverses Herdrich's victory using the federal statute, and also puts the brakes on any pending anti-HMO litigation currently headed for federal courts. "The Justices obviously do not want to see these lawsuits federalized," says TIME legal reporter Alain Sanders. The Court, says Sanders, may be signaling its dissatisfaction with current health care statutes and using this ruling to prod Congress and the President into addressing that vacuum. "They could be saying, look, we're not the branch of government that's supposed to make social policy," he says. In other words, the Court sees itself as a purely interpretive entity, without the will (or desire) to create legislation.