Making a Killing
HMOs and the Threat to Your Health

Contents | 1 | 2 | 3 | 4 | 5 | 6 | Apdx 1 | Apdx 2 | Apdx 3 | Notes

Making a Killing

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It was not supposed to be this way. In 1992, at 41, David Goodrich had hit his stride as a deputy district attorney. But by the spring of 1995, he lay hooked to a ventilator, dying of stomach cancer. He worried about leaving Teresa, his wife, who worked as a schoolteacher, with $750,000 in medical bills. The bills were for treatment which, had it been administered in a timely manner, might have prolonged his life. All this occurred despite David's health insurance from one of the biggest companies in America. It was a worry he would take to his grave.

Flash forward to January of 1999. A jury in San Bernardino, California sent the nation's largest managed care company, Aetna, a $120-million message: Human life should not be sacrificed for money. The largest verdict ever against an HMO went to Teresa Goodrich, after the couple's two-and-a-half-year ordeal trying to compel Aetna to approve cancer treatment recommended by her husband's doctors. When it was clear David Goodrich could wait no longer, his doctors administered care without corporate approval. It was too late.

The jury put Aetna on notice that it cannot ignore its own doctors' recommendations and must act more quickly when a patient's life hangs in the balance. In one instance, it took Aetna four months to approve bone marrow transplantation and high-dose chemotherapy; by then, it was too late to benefit Goodrich. Company and industry standards establish a twenty-four- to forty-eight-hour turnaround time on such requests.

Did Aetna get the message? According to the Hartford Courant, Aetna CEO Richard Huber, responding to the verdict, said, "This is a travesty of justice. You had a skillful ambulance-chasing lawyer, a politically motivated judge and a weeping widow."

Terry and David Goodrich
Terry and David Goodrich
With remorseless defiance of civil dictates, Aetna and its defense lawyers, who made Teresa Goodrich weep on the stand, faulted David Goodrich for breaking the HMO's rules by taking treatment without approval. The verdict was a repudiation of a common HMO tactic of refusing to authorize treatment in a timely manner and then blaming the patient for doing what he or she must do to stay alive.

Aetna's indifference toward covering David Goodrich's treatment also had a price for taxpayers. $500,000 of the care was paid for by the school district where Teresa Goodrich works as a kindergarten teacher.

Aetna CEO Huber said of the Goodrich verdict, "That's no way to get justice and certainly no way to manage a trillion-dollar industry."

Later, a Los Angeles Times columnist reported, Huber "expanded his complaints, telling me that juries are customarily not intelligent enough to consider complicated contractual issues and that this one in particular was too ill-informed, as a result of the judge's evidentiary rulings, to render a sound verdict."

Ultimately, Huber was forced by the public outcry to apologize to Teresa Goodrich. "I want to assure you that I did not intend for the comment to minimize in any way the devastation you feel at the loss of a loved one," Huber wrote.

While she appreciated the note, Teresa Goodrich said, "he did not apologize for what Aetna did to my husband, and that is really what I would like to have an apology for."

Aetna's callousness is matched by its size. Thousands of doctors across the country have defected from Aetna because reimbursements do not allow them to provide quality care. The problem is slated to get worse; as the industry leviathan, Aetna will insure one of every eleven insured Americans after its pending merger with Prudential. In some markets, where Aetna/Prudential will cover more than half of the patients who have insurance through HMOs, like in Bergen County, New Jersey, physicians will have few other options.

If Aetna was alone in its practices, penalties such as the $120 million verdict might deter rogue companies, even one as big as Aetna/Prudential. But during the last decade, an alphabet soup of managed care companies—including health maintenance organizations (HMOs), preferred provider organizations (PPOs), and other for-profit managed care organizations (MCOs)—have wrestled control of the American health care system away from doctors, nurses, and patients. Their promise is a seductive one, to tame medical inflation while providing a variety of preventive health care benefits. Consider a few of the slogans:
  • Your health care options just got better…Raising the quality of health care in America. Aetna U.S. Healthcare;
  • Vote for U.S. Healthcare and Elect The Coverage You Deserve;
  • Few things in life are perfect. We're one of them! Kaiser Permanente
But as David and Teresa Goodrich and thousands of other Americans have found out, these companies have misled the public, swindled those paying the premiums, and grievously and fatally harmed patients in the process. In an effort to avoid accountability and maintain profits, some have tampered with justice. This has taken a toll, reflected in the statistics from recent surveys:
  • 65% of Americans fear that when they are sick their managed care company will be more interested in saving money than in providing the best medical care.1
  • 48% of all Americans report that they or someone they know has had problems with their HMO including difficulty getting permission to see a specialist, difficulty getting a plan to pay an emergency-room bill, and being unable to file an appeal to an independent agency for a denied claim.2
  • HMO patients are 59% more likely to have problems getting treatment.3
  • HMO patients over 65 are 93% more likely to have worse outcomes than fee-for-service patients.4
American medicine has been taken over by the mores of the corporate marketplace. The doctor-patient relationship and its concomitant social values of trust and confidentiality has been eroded by the search for profits. This development threatens not only the health of our citizens but also the foundations of our democracy and civil society.

A decade after HMOs began to dominate Americans' health coverage options, the verdict on for-profit corporate health care is in: unsound and unsafe at all costs.

If our health care system endangers patients, its $1 trillion per year cost reveals colossal waste. The United States spends more per capita on health care and covers fewer people than any other nation in the world. Where does the money go? Twenty to 30% goes to corporate overhead and profits.

Not content with hefty profits, other companies go further. Columbia/HCA, the nation's largest for-profit hospital chain, is one example. Columbia is alleged to have both bilked the government for care it never gave and cut hospital staffing back so far that patients were at risk. In short, do anything to make a buck. Former Columbia/HCA Vice President Marc Gardner blew the whistle, saying, "I committed felonies every day." The documented malfeasance is so wide-spread that, as of this writing in June of 1999, Columbia is expected, as a result of federal charges, to pay one of the largest fines in history.

Reforming our health care system will come too late for David Goodrich and thousands of others. It is not too late for the rest of us. Civil society can restore the fundamental balance of power in medicine that has shifted from the patient, doctor and nurse to the for-profit corporation. But it will depend upon understanding the issues, and organizing for a health care system that has medical and civic ethics at its core. It will require concerted community and political action. It will mean ending the isolation of individuals confronting for-profit medical bureaucracies. This book outlines the problems of the current medical regime and offers steps for returning the concerns of the patient to the primary position in health care decisions.

Do HMOs commit medical negligence and fraud? The first two chapters explore these questions. The third exposes the pillaging of our community hospitals and community-held assets by the corporate managed care empires. The fourth chapter answers whether HMOs are truly cost-effective and reveals the costs imposed upon the system by HMO medicine's short-sightedness and greed. In Chapter Five, we pull back the curtain on the ways HMOs are immune from liability for their wrongdoing and how this shield has allowed HMOs and insurers to deny and delay medically necessary treatment with impunity. The last chapter presents a series of legislative solutions to the crisis in HMO medicine, such as prohibiting HMOs from being owned and operated as for-profit, investor-run entities. Until those reforms are adopted, the appendix offers patients a self-defense kit to demand and receive care.

Was Aetna's treatment of David Goodrich typical of how American HMOs deal with patients in need of life-saving care? Did the jury in the Goodrich case speak for other Americans? The verdict is yours to write.

Jamie Court
Francis Smith
Santa Monica, California
June, 1999

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