Supreme Court Upholds California Medicare+Choice Beneficiaries’ Right to Sue MCOs, Asks for More Details on Maine Rx Program

The U.S. Supreme Court on Oct. 9 declined to hear an appeal of a case giving California Medicare beneficiaries in HMOs the right to sue their health plans over denials of care, the Los Angeles Times reports. Without comment, the court upheld a May ruling by the California Supreme Court finding that Medicare+Choice beneficiaries can sue managed care companies for damages "if [the companies] are negligent or deceptive in caring for their patients." The decision came in the case of George McCall, a Costa Mesa, Calif., man who was "allegedly denied" coverage for a lung transplant by his Medicare HMO, PacifiCare of California, "until it was too late." After McCall died, his wife sued both PacifiCare and its medical group, Greater Newport Physicians, after discovering that her husband "could have received a transplant paid for by Medicare if he had not been enrolled in the HMO" (Savage, Los Angeles Times, 10/10). In its decision, the California Supreme Court ruled that Medicare+Choice members can "bypass" the traditional Medicare review process set forth under federal Medicare law (Holland, AP/Nando Times, 10/9). Tyler Mason, a spokesperson for PacifiCare, which had argued that allowing Medicare HMOs to be sued would prove "dangerous and disruptive," said the company was "disappointed" by the Supreme Court's decision. He added, "[W]e continue to believe there is a significant issue that must be resolved at the federal level." The Los Angeles Times reports that the McCall case will not affect the current prohibition against members of traditional HMOs suing their health plans; that issue is being discussed in the ongoing federal patients' rights debate (Los Angeles Times, 10/10).

Maine Rx
Separately, the U.S. Supreme Court on Oct. 9 asked the U.S. solicitor general for "more information" on Maine's "landmark" prescription drug price control program, further delaying its implementation, the Portland Press Herald reports. The order came in response to a challenge from the pharmaceutical industry against Maine Rx. The program would allow the state to negotiate discounts with drug companies for the 325,000 residents who lack drug coverage (Kesich, Portland Press Herald, 10/10). The law permits the state to take punitive measures against drug companies that refuse to offer discounts, including publicizing those companies' names, forcing doctors to obtain prior authorization from the state before prescribing their drugs and implementing price controls (Kaiser Daily Health Policy Report, 10/16/2000). In its appeal of a federal appellate ruling upholding the program, the Pharmaceutical Research and Manufacturers of America argued that Maine Rx -- whose fate is "being watched closely" by many other states interested in creating similar programs -- violates interstate commerce provisions of the U.S. Constitution and federal Medicaid law. If the Supreme Court had rejected the appeal outright, Maine Rx "would have gone into effect right away"; it is now on hold until the court decides whether to accept the appeal (Portland Press Herald, 10/10). "The fact that they asked for an opinion from the U.S. solicitor general suggests they're seriously [considering] the industry's petition to be heard," Richard Samp, chief counsel of the Washington Legal Foundation, which filed a brief in support of the drug makers, said (Silverman, Newark Star Ledger, 10/10). For further information on state health policy in California and Maine, visit State Health Facts Online.