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HMO Lawsuit Reminds Physicians to Pay Attention  

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Law Feature - October 2005  

ByErin Prather
Associate Editor

A jury's ruling in July that Humana Health Plan of Texas is partially liable for mismanaging the medical care of a San Antonio woman who died from renal failure complications rattled the managed care industry. It also proved physicians need to make sure they understand what their patients' insurance will cover. Otherwise, as a San Antonio physician and a physician group learned the hard way, they could be dragged into court.

Joan Smelik's family filed a wrongful death suit in 2003 alleging that Humana's failure to implement its own written case management procedures contributed to her death in 2001.

The original suit also named two San Antonio physicians, Fred C. Campbell Jr., MD, and Michael W. Mann, MD, and the Alamo City Medical Group as defendants. Although the physicians settled before the trial, Humana's defense team argued that the physicians, not Humana, were liable for Ms. Smelik's death.

San Antonio cardiologist Brant Mittler, MD, JD, who represented the Smeliks, said Humana's attorney claimed the trial was about the physicians' negligence, not Humana's.

"The theme of Humana's defense was that HMOs do not practice medicine, physicians practice medicine," said Dr. Mittler. "At that point the plaintiff team did not blame the physicians for Ms. Smelik's death because those defendants had already settled; Humana affirmatively submitted them to the jury for blame. They did a good job because that's exactly what the jury did." At least partially.

Specifically, the jury found Humana was 35 percent responsible. Dr. Mann would have been 50 percent responsible, and the Alamo City Medical Group would have been 15 percent responsible. The jury assessed no blame on Dr. Campbell, who treated Ms. Smelik under another health insurance plan.

The jury awarded $7.4 million to the Smelik family, 35 percent of which Humana is responsible. Regarding punitive damages, Humana and the Smeliks settled for $1.6 million.

Humana plans to appeal the jury verdict. 

A Failed Referral

Ms. Smelik's HMO member handbook was a significant piece of evidence in the trial. It said Humana would identify cases of chronic disease and make treatment recommendations to the patient, family, and physician. Although Ms. Smelik suffered from emphysema, kidney disease, and a circulatory condition, Humana did not identify her ailments as chronic, trial testimony showed. As a result, she was not placed in the HMO's case management system. Humana made no treatment recommendations to Ms. Smelik, her family, or her physicians. Evidence in the trial also showed that Humana's own computer records indicated it knew of Ms. Smelik's ailments, even down to the small size of her kidneys, an indication of chronic kidney disease.

Dr. Mittler explained that Humana's failure to refer Ms. Smelik to case management was the basis for the plaintiff's case.

"This was not about denial of care; it was about Humana's failure to uphold its obligations in managing the care of Joan Smelik," he said. "Ms. Smelik had a documented episode of acute renal failure in 2000, attributed in part to the effects on her kidneys by a combination of three drugs. Specifically, these were an NSAID agent, a diuretic, and an ACE inhibitor. In January 2001, Humana approved a Vioxx prescription and, later, the exact same three-drug cocktail that had contributed to Ms. Smelik's renal failure five months earlier."

As part of its defense, Humana maintained it was up to the physicians to make medical treatment decisions, which include referring patients to Humana's case management program. Because Dr. Mann and his group failed to do so, Humana argued, they did not follow the policies outlined in both the member handbook and the physicians' administration manual.

Dr. Mann testified that he was unaware case management existed or what policies were outlined in the HMO's member handbook or physicians' administration manual. In fact, every physician who testified at the trial, including the physicians' supporting witnesses, admitted they had never read either publication.

That acknowledgment swayed the jury, says Dr. Mittler.

"The plaintiff team thought Dr. Mann's testimony would be devastating against Humana. We believed it showed Humana was negligent in training the physician about case management. However, the jury told us after the trial that it felt the physicians were partially at fault because they had not known about case management and had not read Humana's publications. That's what helped Humana." 

A New Type of HMO Lawsuit

Smelik v. Humana  was not a standard HMO lawsuit because the company was accused of mismanaging Ms. Smelik's care, not denying it. That kept the case from falling under the federal Employee Retirement Income Security Act (ERISA). ERISA applies to millions of individuals who receive their HMO care through employers and limits the amount of damages that can be recovered in a negligence lawsuit to actual losses. The act often preempts a plaintiff's ability to sue an HMO when it demonstrates negligence, fraud, substandard care, or denial of benefits. In this particular case, Humana did not assert ERISA.

It is difficult to predict what ramifications the jury's ruling could have on the actual role HMOs play in patient care. Texas Medical Association President Robert T. Gunby Jr., MD, says that TMA continues to work toward reducing all errors in health care. 

"TMA has worked to assure that those HMOs that influence how medical care is practiced be accountable for their decisions and their promises. In this case, the jury found that an act or omission by the HMO was either grossly negligent or fraudulent, and this served as the basis for the adverse verdict," he said.

For the future, Dr. Mittler recommends physicians review all health plan materials before deciding to join a health plan network. This should include the materials the HMO gives patients. He also suggests physicians develop a strong understanding of the HMO's policies for case management because every company program varies.

"Physicians need to remember that when they get in bed with managed care, and God forbid something goes wrong, managed care most likely is going to blame them."

Erin Prather can be reached at (800) 880-1300, ext. 1385, or (512) 370-1385; by fax at (512) 370-1629; or by email at  Erin Prather.  

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