Court: Financial incentive disclosure rests with HMO
Ruling is a victory for Illinois physicians
In a major win for physicians, the Illinois state Supreme Court ruled that patients suing physicians for negligence can’t also sue them for not revealing payment arrangements with managed care companies. In fact, the responsibility is on managed care companies to inform their members about any financial arrangements they’ve made with physicians for their services, the court decided.
The decision is especially important because it denies patients the ability to file lawsuits based solely on a physician’s failure to disclose financial incentives. It also takes away a powerful financial incentive argument for awarding higher damages in malpractice cases, note experts. "If the court had gone the other way, it would have been chaos for physicians," says LeRoy Sprang, MD, speaking for the Illinois State Medical Society. "Patients need to understand what the plan offers. But it’s the responsibility of the plan to explain that before a patient signs up so they can make informed decisions when they are buying the plan."
The difference in this case
The Illinois case — Therese Neade v. Steven Portes, MD, and Primary Care Family Center — was slightly different from other class action lawsuits that have been filed against managed care companies for failing to disclose financial incentives they offer physicians. Prior HMO-related cases are based on the disclosure requirements in the Employee Retirement Income Security Act. The question at the heart of the Neade case was whether physicians have a fiduciary duty to disclose conflicts of interest, just like a lawyer, real estate agent, or judge.
Therese Neade filed the case after her husband, Anthony, died of a heart attack caused by coronary blockage. She alleged that after her husband complained of chest pain, her doctor ignored the recommendation of another physician who had examined him and recommended he have an angiogram. Another physician also had made that recommendation months earlier. Instead, the doctor of record relied on hospital tests done about 10 months earlier, including a thallium stress test and an electrocardiogram that were normal.
After Neade died, his widow alleged her husband’s doctor breached his fiduciary duty by not telling them his practice group received 60% of any money not used on referrals to specialists. Had the Neades known that, she said, they would have questioned the doctor’s refusal to approve an angiogram and would have sought a second opinion outside of the group.
The Illinois trial court originally threw out the fiduciary duty claim, but the appellate court reinstated it, saying there are times when a plaintiff could bring a negligence and breach of fiduciary duty claim. The Illinois Supreme Court disagreed, arguing that the breach of fiduciary duty claim duplicates a medical negligence claim because, ultimately, a fiduciary duty claim "would boil down to a malpractice claim." The court also said the Illinois Managed Care Reform and Patient Rights Act puts the burden of disclosing HMO incentive schemes on the HMO companies.
"Moreover," the court said, "the outcome that would result if we were to allow the creation of a new cause of action for breach of fiduciary duty against a physician in these circumstances may be impractical. For example, physicians often provide services for numerous patients, many of whom may be covered by different HMOs. In order to effectively disclose HMO incentives, physicians would have to remain cognizant at all times of every patient’s particular HMO and that HMO’s policies and procedures."
You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
- Award-winning Medical Content
- Latest Advances & Development in Medicine
- Unbiased Content