High Court Ruling Expected On HMO Courtroom Venue

The U.S. Supreme Court has agreed to hear arguments as to whether suits brought against a health maintenance organization (HMO) can be brought in a state court system or a federal one. Which courtroom venue is selected can have major financial consequences because a state court can award high amounts of punitive damages, whereas, in a federal court, participants would be limited to the value of the benefit denied by an HMO.

Two cases involving patients' rights will set the stage for the high court ruling. Both cases coming before the high court are from Texas. One involves an Aetna Health plan participant who was required to use a cheaper alternative to the painkiller Vioxx, which his physician had prescribed for arthritis. The patient alleges that the cheaper drug caused him to have bleeding ulcers and suffer a near heart attack. The second case involves a Cigna Healthcare plan participant who had a hysterectomy and claimed she was forced to leave the hospital after one day of recovery—despite a doctor's recommendation that she have a longer hospital recovery period.

The cases are Aetna Health Inc. v. Davilla (02-1845) and Cigna Healthcare of Texas v. Calad (03-83).

Both cases were filed under a 1997 Texas law allowing patients to sue HMOs. They were then transferred to federal court after the insurers said the plaintiffs should have contested the refusal of their claims under the Employee Retirement Income Security Act (ERISA). In 2002, a federal appeals court ruled HMOs could be sued in state court for malpractice and Aetna and Cigna then appealed to the supreme court.