Your Rights to Have your HMO's Decisions Independently Reviewed and to Sue Your HMO
This chapter first overviews the workings of the independent review process, which is available to review some denials of care. The second part discusses what limitations you may face in bringing a lawsuit against your health plan (referred to generically throughout this chapter as "HMO") if you have health coverage through a private employer. The remainder of the chapter explains your right to sue under a new California law and its relationship to the independent review process.
WHAT ARE MY RIGHTS TO AN INDEPENDENT REVIEW OF AN HMO DENIAL?
The independent review process is designed to get HMO treatment denials based on medical necessity (where HMOs say that you do not medically need a treatment) reviewed quickly and resolved informally with the goal of getting you care in as prompt a manner as possible. The independent review process is intended to be "independent" of the HMO and is administered through and supervised by the Department of Managed Health Care. If the independent review concludes that the health care service should be provided, the HMO is required to provide the service or reimburse you if the service was obtained out of plan and paid for by you.1
IS THERE A DIFFERENCE BETWEEN FILING A GENERAL GRIEVANCE WITH THE DEPARTMENT OF MANAGED CARE AND SEEKING AN INDEPENDENT REVIEW?
It is important to note that there are two separate and distinct review processes conducted under the jurisdiction of the Department of Managed Health Care:
WHAT HMO DECISIONS ARE SUBJECT TO INDEPENDENT REVIEW?
Independent review applies when:
The requested health care service is "eligible" for coverage under the plan.4
For example, if the requested service is for proton beam therapy, you will only qualify for independent review if proton beam therapy is eligible for coverage under the plan. If there is no provision in your plan excluding coverage for proton beam therapy and yet your HMO denies the treatment as "experimen-tal" and therefore not covered, you may be able to have the denial independently reviewed if you have a life-threatening or serious condition. This is explained in more detail below.
The request for the health care service has been denied, modified or delayed.5
If the plan denies you treatment outright, if there has been a delay that amounts to a denial, or if the plan has approved only a different type of treatment, the review process applies. You can use the independent review process, for example, when your doctor is recommending a hysterectomy for treatment of recurrent cervical cancer, but the HMO will only approve cervical cryosurgery. Similarly, when the doctor recommends proton beam radiation for treatment of prostate cancer, but the HMO only approves surgery, you can also use the independent review process.
The denial is based, in whole or in part, on a finding that the health care service is not medically necessary.6
This is where the biggest divergence between the liability statute and the independent review statute occurs. The liability statute is not limited to HMO decisions that are based on medical necessity – when HMOs say you do not medically need a service.
The denial, delay or modification is by the HMO or one of its contracting providers.7
This requirement will be very easy to show. Whether the treatment decision comes from the doctor, the medical group, a utilization review service or the HMO itself, the fact that the entity was given the power to make a treatment decision will show there is a contract of one form or another between the HMO and that entity. This provision was added for the purpose of protecting patients from claims by the HMO that it did not make the decision, but that the medical group or some other entity did.
The requested health care service has been recommended by a medical provider as medically necessary.8
Before the independent review process can be used, the requested treatment must be recommended by a health care provider as being medically necessary, but the provider need not be an in-plan provider. The recommending doctor can be an out-of-plan doctor.
You have filed a grievance with the plan and the disputed decision must have been upheld by the plan, or the decision must have been unresolved after 30 days.9
This is a very important provision. Once the HMO issues its initial decision, you must file a grievance with the plan or its contracting provider pursuant to Health & Safety Code section 1368. (See chapter VI for more information on the grievance process.) In non-emergency cases, the independent medical review system can be initiated only if the denial is upheld by the plan, or the grievance has not been resolved within 30 days. The plan's internal grievance process must be used before the independent review process is initiated. In turn, in most cases, the independent review process must itself be used before litigation can be filed.
IS THERE AN "EMERGENCY REVIEW"?
Yes. Expedited review is required in "cases involving an imminent and serious threat to the health of the patient, including, but not limited to, severe pain, potential loss of life, limb, or major bodily function."10 Where a grievance requires expedited or emergency review, you are required to participate in the plan's grievance process for no more than three days before the review process can be initiated.11
IS THERE A SPECIAL REVIEW PROCESS FOR EXPERIMENTAL TREATMENTS?
Yes. As of January 1, 2001, every health care plan must have an external, independent review process that can review the plan's coverage decisions regarding experimental or investigational therapies.12 To b e eligible for this independent review process, you must meet all of the following criteria:
HOW DOES THE INDEPENDENT REVIEW PROCESS WORK?
Who decides if the treatment decision is one that is subject to independent review?
The Department of Managed Health Care makes the determination of whether the claim is subject to the independent review process or the separate general grievance process.17
How is the claim of a minor or incompetent person submitted to the independent review process?
If a minor or incompetent person's claim needs to be reviewed, the request for review can be submitted by the parent, guardian, conserva-tor, relative or other designee of the patient as the agent of the pa-tient.18 "Relative" is defined as a parent, stepparent, spouse, adult son or daughter, grandparent, brother, sister, uncle or aunt of the patient.19
Yes, the provider (e.g., doctor) can assist with the submission of the claim to the independent review process and may advocate on behalf of the patient.20
Does the independent review process apply to Medi-Cal members?
Yes.21 Medi-Cal members can choose to use the independent review process instead of the review process under the Medi-Cal program, known as the Medi-Cal "fair hearing process." For information on the Medi-Cal fair hearing process and to obtain a fair hearing form, contact the Department of Social Services at: 1-(800)952-5253 or 1-(800)952-8349 (TDD). Medi-Cal members should also contact the Department of Managed Health Care at (888) HMO-2219 or (877) 688-9891 (TDD) to determine which process would be most appropriate in their particular case.
Does the independent review process apply to Medicare members?
In most cases, probably not. Medicare has its own grievance and appeal system established by the U.S. Department of Health and Human Services. The independent review process for Medicare members is administered by the Center for Health Dispute Resolution (CHDR). For more information, contact CHDR at (716) 586-1770 and/or download information and forms on their Web site at: http://www.healthappeal.com/medicare.htm.
Is there an application or processing fee?
Not for the patient.23
Where do I get an application form for seeking independent review?
The plan must provide you with an application form and an addressed envelope as part of its notification to you regarding the decision made on your grievance.24
Additionally, as part of that form, the health plan must provide any information required by DMHC, such as your diagnosis or condition, the disputed health care service sought, a means to identify the case (such as a file or record number), and any other relevant information. The form must also include notice that a decision not to participate may cause loss of the right to sue, a consent form to obtain any neces-sary medical records, and notice of your right to provide information or documentation.
What documents or information can you submit to DMHC for the purposes of the review?
Yes, but only in an extraordinary and compelling case where the Direc-tor finds that you have acted reasonably and where there is "an immi-nent and serious threat" to your health.30 That, in turn, occurs when there is "serious pain, the potential loss of life, limb, or major bodily function, or the immediate and serious deterioration" of your health.31
Can the independent review process be expedited and, if so, in what circumstances?
Yes. The independent review process can be expedited when there is "an imminent and serious threat" to your health.32
Who conducts the independent review?
The independent review is conducted by one or more independent medical review organizations that contract with the Department of Managed Health Care.33 The review organizations must be independent of any health care service plan doing business in this state and there are conflict provisions in the statute that preclude the review organization from having any material professional, familial, or financial affiliation with:
Can the reviewers request other information over and above that already submitted to them?
Yes. But if they request any further information, a copy of the request and the response must be given to all of the parties.
What do the reviewers base their decision on?
The reviewer or reviewers must determine whether the disputed health care service was medically necessary based upon your specific medical needs.35 The reviewer or reviewers may also consider any of the following:
How is the decision made? Must it be issued in writing?
The decision must be issued in writing and set forth in layperson's terms to the maximum extent practicable.37 The determination must state whether the disputed service is medically necessary and must cite the medical condition and the relevant documents and findings associated with the information relied on to support the determination.38
If more than one reviewer is assigned to the review, the recommendation of the majority shall prevail. If the reviewers are evenly split, the decision shall be in favor of providing the service.
Do I get a copy of the decision?
Yes. You, your plan, and your doctor must receive a copy of the analysis done by each reviewer, if there was more than one. You will also receive a description of the qualifications of the medical professionals who reviewed the case. The names of the reviewers are kept confidential, unless the reviewers are called to testify or in response to court orders.39
Once the reviewers' determinations are provided to the Director, he or she must immediately issue a written decision to the parties.
If the decision is in my favor, does my plan have to provide the treatment?
Yes. The decision of the Director of the DMHC is binding on the plan.40 Since the independent review process applies only to medical necessity determinations, however, it is only binding in that respect. If the plan denied the procedure on another basis as well, the plan may argue that the Director's determination cannot force the plan to provide the service, but only resolves the issue of medical necessity.
Are the decisions available to the public?
Once a decision has been issued, the Director must make the decision public, upon request, and at the Department of Managed Health Care's expense, after removing the names of all parties.41
What recourse is there if the plan delays the review process or delays in implementing the decision rendered?
If your plan delays the review process, it is subject to fines, penalties or other remedies that can be imposed by the Director. If the plan delays in implementing the decision, it will be subject to a penalty of not less than $5000 per day for each day that the decision is not implemented.42
If the review relates to the plan's denial of payment for urgent or emergency services obtained out of the plan network that were denied by the plan, can the plan be required to reimburse me for the costs of those services?
Yes, so long as the Director finds that the enrollee's decision to secure the services outside of the network and without using the grievance or review process first, was reasonable under the circumstances and the disputed services were a covered benefit under the plan.43
Who pays for the independent review?
Independent review costs are paid by the health care service plans through a fee assessment system.
What is the timeline for the review process and can the timeline be expedited?
The following are the timelines for a basic review, and for an expedited review based on a finding that there is an "imminent and serious threat" to your health.
WHAT IS THE RELATIONSHIP BETWEEN SUING AN HMO & APPEALING DENIALS OF CARE THROUGH MY PLAN'S INTERNAL GRIEVANCE PROCESS OR THROUGH THE INDEPENDENT REVIEW PROCESS?
With respect to claims that fall under the general grievance review procedures (see chapter VI), but not the independent review proce-dures, you may still bring a lawsuit against your HMO without com-pleting the HMO's internal grievance process.44
The California "right to sue" law requires you to go through the independent review process before bringing suit - with the exception of certain situations discussed below.
For a checklist that summarizes the steps to take as they relate to the grievance process, independent review, and filing a lawsuit, see Appendix B at the end of this guide.
ARE THERE ANY EXCEPTIONS TO THE REQUIREMENT THAT I USE THE INDEPENDENT REVIEW PROCESS BEFORE FILING A LAWSUIT?
Yes. The independent review process need not be used where: "Sub-stantial harm" has occurred prior to the completion of the applicable review; OR "Substantial harm" will imminently occur prior to the completion of the applicable review.45
If you have been, or are in danger of being substantially harmed by your HMO's actions, you do not have to use the independent review process. For example, if you need immediate surgery for which your HMO has denied coverage and you may die or be seriously harmed if you do not receive the surgery, then you can go ahead with the surgery and do not have to use the independent review process before filing a lawsuit to recover what you had to pay for the surgery.
WHAT ARE THE LIMITS ON MY ABILITY TO SUE AN HMO?
If you choose to bring a lawsuit against your HMO, and you have health coverage through a private employer, any monetary award (or "damages") you may receive to compensate you for your injuries may be severely limited by a federal law known as ERISA (Employee Retirement Income Security Act, 29 U.S.C. section 1001, et seq.) Although originally enacted to prevent pension plan abuses, ERISA also applies to all employee benefit "plans," including health care coverage benefits, even when there is no formal "plan" established by the employer and even when the health care benefits are provided through the purchase of a group insurance policy.47
WHO IS NOT LIMITED BY ERISA IN THEIR RIGHT TO RECOVER DAMAGES?
HOW DOES ERISA LIMIT THE ABILITY OF PRIVATE SECTOR EMPLOYEES TO RECOVER DAMAGES IN A LAWSUIT?
ERISA can take away your ability to recover damages over and above the actual benefits that are owed to you. For example, if you need a bone marrow transplant and the HMO illegally refuses to pay for it, (see sidebar next page) California law might allow you to recover for the cost of the transplant, other medical care expenses, certain losses and the emotional distress you suffered as the result of the HMO's misconduct. Under ERISA, however, all you would be able to recover would be the cost of the treatment itself and, if the court chooses to award it, reasonable attorney's fees.
As another example, if your spouse or child needed lifesaving treatment that the HMO refused to provide and your loved one died, under California law if you met the criteria necessary to bring a lawsuit (see sidebar on this page), you would be able to sue the HMO for your losses resulting from the death of your loved one. Under ERISA you cannot.
WHAT ARE MY RIGHTS UNDER CALIFORNIA LAW TO SUE MY HMO?
A new law in California, effective January 1, 2001, allows lawsuits against an HMO, even in most cases, when brought by a private sector employee who is subject to ERISA.49 The law states that where the HMO's conduct results in the denial, delay or modification of the recommended treatment, the HMO can be liable (held legally responsible for its wrongful acts). Basically, the California statute is intended to make the HMO responsible for injury caused when it makes health care and/or treatment decisions under the guise of "cost management."
NOTE: This law will be referred to throughout the remainder of this chapter as the "liability statute."
WHEN DOES THE RIGHT TO SUE MY HMO TAKE EFFECT?
The liability statute applies only to "services rendered on or after January 1, 2001." There is some ambiguity here, of course, because if the HMO denies a request for services, there are, in fact, no "services rendered." The intent of the statute, however, was clearly to apply to HMO treatment decisions made on or after January 1, 2001.
UNDER WHAT CIRCUMSTANCES CAN I SUE MY HMO?
In most cases, before you sue your HMO, you must use (or "exhaust") the independent review process set forth in Health & Safety Code section 1374.30.51 See the sidebar at left for all the conditions that must be met before you can sue your HMO.
WHERE CAN I SUE?
While you have the right to "sue" your HMO, you may still be limited as to where you can bring your action. Most health plan contracts require you to arbitrate your disputes rather than filing a lawsuit in a court of law. Arbitration is the legal process of resolving disputes out of court through the use of a private, neutral decision-maker who will apply the liability standards as set forth above. Plans that require binding arbitration must clearly disclose that fact to you in clear and understand-able language in your plan contract or enrollment agreement directly above the signature line.52
If you are only seeking to stop a plan practice that has harmed you and others, but not damages, however, you may be able to bring a lawsuit in court without going through the arbitration process.53 Also, if your health care plan unfairly administers its arbitration program, such as by delaying consideration of your claim, you may be able to bring a lawsuit in court against your health plan for fraud.54
Every health plan that uses arbitration to settle disputes with its members must file a copy of any written arbitration decision with the Department of Managed Health Care. The filed copy must include the amount of the award, the reasons for the award and the names of the arbitrators. By law, the names of the plan, member, witnesses, attor-neys, provider, plan employees and plan facilities are deleted from the copy filed with the Department. These redacted copies of the decisions are filed each quarter and available to the public.55 You can find them online at http://www.hmohelp.ca.gov/library/arbitrations.