Supreme Court: HMOs are supposed to ration

On June 12, the U.S. Supreme Court ruled that patients cannot sue their HMOs under federal law just because the HMOs design financial incentives to induce physicians to withhold health care.

This ruling was brought on the case of Cynthia Herdrich, whose appendix ruptured when her HMO doctor delayed the performance of appropriate tests. Herdrich had argued that the doctor and the HMO had violated their fiduciary duties to act in her best interests.  The HMO in this case had offered the doctor a bonus for holding down the cost of care.  That bonus, Herdrich argued, incented her doctor to delay the tests she needed, and as a result she had suffered a serious injury.

In writing the opinion of the majority of the Supreme Court, Justice Souter said that rationing health care was the very point of any HMO scheme.  Congress has a 27 year history of passing legislation encouraging HMOs to do just that.  And the federal courts would be acting contrary to congressional policy to allow lawsuits of the type brought in this case.

DrRich comments:

We told you so.  When this case was first argued before the Supreme Court in February, our pithy analysis confidently predicted that the Court would rule against Herdrich. (See Woman's Appendix Ruptures Supreme Court )  We also explained why it would do so - namely, because our society has made a bargain with HMOs to ration health care for us.  It would not be fair, then, for individuals to be allowed to sue the HMOs for doing exactly what we want them to do and insist they do.  

What we didn't predict was that the Supreme Court would come right out and explain why Herdrich's suit could not stand. But amazingly (and for the first time by a public official, to the best of our knowledge), Souter's opinion explicitly outlines the Faustian bargain we've made with HMOs.  The HMOs' job, ordained by us, is to ration health care.  This being the case, individuals who happen to be personally harmed by the rationing (since it is a given in making the bargain that some individuals will be harmed), are just going to have to live with it - at least as far as the federal courts are concerned. 

Once again the message is driven home.  Patients cannot assume that their doctors or their health plans are acting in their best interests.  In fact, quite explicitly, they are not. We've set the system up this way; that's the deal we've made.  And as of today the reality of this "deal" goes beyond the rantings of a few disaffected individuals, like DrRich.  Now it's the law of the land.

06/13/2000

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