Malpractice Revisited
Robert Chabon, MD, JD and Erling Hansen, JD
Three years ago, writing about the
U.S. Supreme Court's decision in Pegram v. Herdrich1,
author Hansen opined that the Court's discussions about issues
on which it was not then ruling, referred to as dicta,
would give a boost to additional lawsuits against managed care
plans on grounds of both ERISA and malpractice.2 In Pegram,
the Supreme Court ruled it would not hold physician employees
of an HMO accountable as fiduciaries under ERISA decisions where
eligibility and medical treatment issues were inextricably mixed.3 Writing
for the Court, Justice Souter reasoned that such decisions were
inherent to HMO structure as promoted by the federal HMO Act
of 1973 and not to be undermined by the judiciary, "untethered
to claims of concrete harm."4 The United
States Court of Appeals for the Second Circuit recently had an
opportunity to apply the rationale of Pegram to a case, Cicio
v. Vytra Healthcare et al.,5 where
the plaintiff's ERISA claims were joined with allegations of
negligent medical decision-making. In Cicio, the Second Circuit,
under a ruling giving full credence to the New York plaintiff's
statement of the facts, found that the type of concrete harm
Justice Souter possibly had in mind may have
been alleged as an independent failing to provide quality of
care related, i.e., "tethered," to
a Pegram-like "mixed eligibility and treatment decision"6 involving the determination of contract benefits.
The facts of Cicio7 are interesting
if only for how ordinary they are from a managed care medical
decision-making standpoint:
In March 1997, Carmine Cicio, the spouse
of the plaintiff, was diagnosed with multiple myeloma, a malignancy
second only to leukemia in prevalence among cancers of the blood.
At that time, he received health care benefits pursuant to an "Agreement
for Comprehensive Health Services" as a participant in an ERISA-governed
HMO health plan administered by Vytra Healthcare, an
IPA-HMO. He began his chemotherapy a month later. His disease
progressed, however, and on January 28, 1998, some ten months
after initial diagnosis, his treating oncologist, Dr. Edward
Samuel, wrote a detailed letter to Vytra, requesting approval
for high- dose chemotherapy supported by a double stem cell transplant.
In a reply dated February
23, 1998, Dr. Brent W. Spears, Vytra's medical director, denied
the request, stating that the procedure was not covered because
it was experimental and that experimental / investigational procedures
were not covered under Mr. Cicio's policy.
On March 4, 1998, following
an unspecified number of unsuccessful attempts to contact Dr.
Spears by telephone, Dr. Samuel wrote directly to Dr. Spears
asking him to reconsider his decision. In this letter, he argued
that the treatment of multiple myeloma with high-dose chemotherapy
and autologous stem cell transplantation is a well-established
approach, with a superior response rate and even some potential
for a cure. He mentioned that these facts were true for single
transplant methodologies and that response rates improved even
further with double transplants. However, his letter made clear
that he was requesting a double stem cell transplant.
Three weeks later, in a letter
dated March 25, 1998, to Dr. Samuel, Dr. Spears reaffirmed
the denial of the double transplant but approved a single stem
cell transplant, which had never been requested. Unfortunately,
by this time Mr. Cicio was no longer a candidate for any stem
cell transplant. He expired less than two months later, on May
11, 1998.
His wife, Bonnie Cicio, filed a complaint
on behalf of herself and the estate of her late husband, in New
York Supreme Court, Suffolk County, naming Vytra, Dr. Spears
and eight unknown physicians employed by Vytra as defendants.
The complaint contained eighteen counts, alleging "medical malpractice,
negligence, gross negligence, intentional infliction of emotional
distress, negligent infliction of emotional distress, misrepresentation
and breach of contract."8 Vytra removed
the case to U.S. District Court of the Eastern District of New
York and filed a motion to dismiss. The district court granted
Vytra's motion, finding that Cicio's state law claims were preempted
by ERISA under Sections 502(a) and 514(a) because the plaintiff "sought
to enforce the terms of an employee welfare benefit plan."9 Magistrate
Judge Boyle said, "[t]here is no evidence that Congress intended
that these quasi-medical/administrative decisions made by a plan
administrator survive ERISA preemption."10 He
further declined to endorse the plaintiff's argument that her
medical malpractice claims were not preempted because they concerned "mixed
eligibility and treatment decisions," as described in Pegram.11 Boyle
observed that Ms. Cicio had not challenged the "quality of care
but rather the benefits decision that was made."12
The plaintiff appealed this
decision to the United States Court of Appeal for the Second
Circuit. The case was argued on June 20, 2002, and the decision
handed down on February 11, 2003. It is precisely the determination
of Magistrate Boyle, agreed with by the district court, that
Mrs. Cicio's complaint
did not challenge the quality of the medical decision made by
Dr. Spears, with which the Second Circuit disagreed. In the view
of the reviewing court, the correspondence between Drs. Samuel
and Spears, which had been attached to the complaint and incorporated
therein by reference, "suggests that Ms. Cicio is contending
additionally or in the alternative that Dr. Spears, in making
negligent medical decisions about Mr. Cicio's condition, was
engaged in medical malpractice? By denying one treatment and
authorizing another that Dr. Samuel had not specifically requested,
Dr. Spears at least seems to have been engaged in a patient-specific
prescription of an appropriate treatment, and, ultimately, a
medical decision that a single stem cell transplant was the appropriate
treatment for Mr. Cicio."13 The Court
of Appeals concluded that the plaintiff had "alleged that the
defendants made a decision that could implicate a state law duty
concerning the quality of medical decision-making, in addition
to and independent of her claims concerning the administration
of benefits with respect to her late husband's course of care" (emphasis
supplied).14 The court took care to
note that, for purposes of the motion to dismiss that was under
review, "[w]e conclude only that?the plaintiff has alleged more
than an adverse benefits decision."15 Of
potentially greater significance, the appeals court asked "whether
a state law medical malpractice claim brought with respect to
a medical decision made in the course of prospective utilization
review by a managed care organization or health insurer is preempted
under ERISA § 514, and therefore beyond the reach of state
tort law?"16 and concluded that "such
a state law claim is not preempted."17 Thus
the court was able to grant valuable relief in the form of a
remand to federal district court and possible remand to state
court for a determination whether, under the law of New York,
the complaint stated a cause of action. But again to underscore
that they had made no ruling on the merits of Ms. Cicio's lawsuit,
the appellate judges ended their opinion by reiterating "?we
do not decide under what circumstances, if any, the decisions
made by Vytra or Dr. Spears, or utilization review decisions
generally, may when negligently made be actionable under New
York law. Perhaps they never are. Unless the district court determines
that Dr. Spears was in fact making pure eligibility decisions
with respect to Mr. Cicio's health care and dismisses the claim
on that ground, that will be a question for the New York courts
to decide upon remand."18
Regardless of the future course of the Cicio case following
its remand to the district court, it is likely that two things
will change if they are not already changing. Without doubt,
in lawsuits arising from an ERISA-governed health plan where
certain harm has resulted from utilization review (or some other
aspect of managed care that involves mixed eligibility and medical
treatment decisions), plaintiff counsel will take care to plead
facts demonstrating the tort of medical malpractice under applicable
state law.19 Equally without doubt,
medical directors and other practitioners of such decision-making
in managed care organizations and health insurers will no longer "negotiate" with
an enrollee's physician about an appropriate treatment or level
of care. The lesson of Cicio for them is to approve
or deny the treating provider's request as made and engage in
no correspondence or conversation that could form the basis of
an independent act of medical negligence. Sadly, this may shut
down the otherwise healthy exchange of information and treatment
opinions between insurers and their participating providers.
Initial denials may increase if saying "No" is perceived to be
a safe harbor following Cicio. And the use of external review
may have gotten another shot in the arm; following the Supreme
Court's 2002 decision that state independent medical review laws
are not preempted by ERISA,20 the Cicio case
may be further evidence to health plans in particular that the
external review process is a safer vehicle for resolving difficult
coverage questions because it may help avoid medical decision-making
in-plan that can be characterized as negligent medical practice
by the plaintiffs' bar.
References:
- Pegram v. Herdrich, 530 U.S. 211, 120 S. Ct. 2143 (2000).
(hereinafter
"Pegram").
- Hansen, E., "HMO
Malpractice: Have the Floodgates Opened? Managed
Care Interface (September 2000) p. 84.
- Pegram, 530 U.S. 237, 120 S. Ct. 158
- Pegram, 530 U.S. 233-34, 120 S. Ct. 2156-57.
- Cicio v. Vytra Healthcare et al., 321 F.3d 83; 2003 U.S. App
LEXIS 2925 (2d Cir. 2003) (hereinafter "Cicio").
- Cicio, 2003 U.S. App LEXIS 2925, 48, citing Pegram, 530 U.S. 229, 120 S. Ct. 2154.
- The facts are summarized
from the opinion of the Second circuit at 2003 U.S. App LEXIS
2925, 3-8.
- Cicio, 2003 U.S. App LEXIS 2925, 9.
- Cicio, 2003
U.S. App LEXIS 2925, 10.
- Id.
- Cicio, 2003
U.S. App LEXIS 2925, 11.
- Id.
- Cicio, 2003
U.S. App LEXIS 2925, 16-18.
- Id.
- Cicio, 2003
U.S. App LEXIS 2925, 19.
- Cicio, 2003
U.S. App LEXIS 2925, 36.
- Cicio, 2003
U.S. App LEXIS 2925, 37.
- Cicio, 2003
U.S. App LEXIS 2925, 61.
- A recent ruling
by the 4th Circuit Court of appeals in another Pegram-like case, Marks v. Watters, highlights the importance of understanding the
type of managed care arrangement under scrutiny. In Marks,
the managed care organization was behavioral services preferred
provider organization ("PPO") that performed utilization
review but did not have direct service delivery responsibilities vis-a-vis the
patient. Therefore, by contract, neither the PPO nor its case
manager could render a mixed eligibility/treatment decision
because they were insulated from and had no contact with the
practitioners actually providing care. The reviewing court
in Marksfound that the PPO and case manager were engaged in
purely fiduciary functions within the meaning of ERISA and
that allegations of malpractice were necessarily preempted.
Marks v. Watters, No. 02-1486, U.S. Ct. App., 4th Cir. (March 14,
2004).
- Rush
Prudential HMO, Inc. v. Moran, 536 U.S. __, 122 S. Ct. 2151 (2002).
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