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Insurance-benefits act needs its shortcomings repaired

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I was pleasantly surprised to read your editorial of Sunday, July 19, titled "Restoring trust in health care." I agree that it is necessary for Congress to provide an effective remedy to families who have been denied health insurance benefits by an HMO or insurer.

As an attorney, I spend most of my time representing individuals, doctors and hospitals attempting to obtain payment from health insurers or health benefits plans. Most of my work involves litigation under the Employee Retirement Income Security Act (ERISA), the statute Congress is considering amending.You correctly point out that under ERISA the most an individual may recover in a lawsuit if he/she believes payment from an insurer has been wrongfully denied is the actual cost of the treatment. The HMO or insurance company cannot be made to pay anything for lost wages, suffering or other consequential damages.

My experience, echoing your concern, is that HMOs and insurance companies are frequently insensitive about the effects on patients and their families of their decisions to deny payment of claims.

One of the additional aspects of ERISA that is only rarely understood is that, in most circumstances, a court will overrule an insurance company's or HMO's denial of benefits only if the individual proves that the insurer or HMO acted arbitrarily or capriciously. This is a very difficult wall for individuals to scale.

In short, in most cases, insurers and HMOs can act with impunity in denying benefits. They know this very well and, although in many cases they do not abuse the privilege, there are many instances where benefits were denied without investigation or without a basis under the insurance policy. In these situations, more often than not, there is simply no recourse for individuals except to pull out their checkbook and pay the bill themselves.

HMOs and insurance companies are businesses like any other. They cannot operate without bringing in more money than they pay out. Without an economic stick in place to deter them from acting carelessly or callously in simply denying benefits for any reason that may possibly exist, these companies tend to act more with an eye toward their own financial well-being than to fairly administering their health benefits plans.

Providing the possibility for individuals to recover damages above and beyond the actual cost of denied medical care when that denial results in proven injury or loss will help make certain that insurers and HMOs act fairly and properly in paying out benefits when required under the terms of their insurance policies or health plans.

I recently handled a case where the wife of a trucker developed leukemia. She had health benefits through her husband's employment, but in light of her serious illness, he could not continue with his work. At the time he terminated his job, the trucking company failed to provide to him and his wife an option to continue coverage as they were required to do under the terms of their health plan and state law. Only after many months of legal maneuvering and, eventually, filing a lawsuit did the company acknowledge its obligation to provide continuation coverage for her cancer treatment.

In the meantime, her condition had deteriorated to the point where a bone marrow transplant was no longer possible. She died shortly before the case was resolved. The only thing that we could obtain for this unfortunate family was partial payment of the medical bills that she had incurred. There was no ability to recover any other damages for her injuries as a result of having her health benefits terminated in the middle of a crucial time frame for her treatment.

As it stands, ERISA is a very hostile statute to individuals. Changes in the statute are necessary to provide greater protection to each of us as consumers. These include providing the ability to recover damages for lost wages, for suffering or other consequential loss, making an award of attorneys' fees to prevailing individuals mandatory, allowing individuals to prove their cases by a preponderance of the evidence and requiring that disputes about medical necessity for treatment be submitted for decision to an objective panel of doctors rather than doctors within the insurance company or HMO.

Only with these changes will the playing field be leveled somewhat for individuals who must go up against large insurance companies and HMOs.