Texas jury finds HMO negligent in wrongful death case

Rather than alleging denial of care, these plaintiffs argued the insurer did not manage the patient's care the way it promised in its member handbook.

By Mike Norbut — Posted Aug. 15, 2005

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In a case that could have ramifications for the way courts view an HMO's role in patient care, a Texas jury last month found a local health plan negligent in a $7.4 million wrongful death case.

The jury in Bexar County District Court, which includes San Antonio, found Humana Health Plan of Texas responsible for 35% of those damages in Joan Smelik's death.

The Spring Branch, Texas, woman died in 2001 after complications of renal failure. Smelik's husband and two children sued, alleging that the HMO's failure to live up to its obligations of case management as described in its member handbook played a role in her death.

How the verdict could affect physicians in the future is still unclear. Some experts say the threat of a patient lawsuit against a health plan will give doctors a better chance to take HMOs to task for their decisions.

"I think doctors should get back in the business of knowing and challenging what HMOs are doing," said Brant Mittler, MD, a cardiologist in San Antonio and one of the Smeliks' attorneys. "They shouldn't just accept that they're not doing what they say they will."

But others say the verdict could blur the roles of physician and insurer and lead to second-guessing of a doctor's clinical decisions.

"To suggest an HMO or insurer has a duty to establish or maintain treatment protocols, I just don't know of other courts that have recognized that," said Barry Senterfitt, an Austin, Texas-based attorney who specializes in insurance law. "I don't think the insurance companies or physician community want that either. They already complain about medical necessity. Now this goes one step further."

In a statement, Texas Medical Assn. President Robert T. Gunby Jr., MD, said the group was working to reduce errors by everyone involved in health care.

"The Texas Medical Assn. has worked to assure that those HMOs that influence how medical care is practiced be accountable for their decision and their promises," Dr. Gunby said. "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."

A different approach

This case was unlike the typical HMO lawsuit because the plaintiffs did not accuse Humana of denying care. Instead, the plaintiffs alleged negligence and fraud in the way the insurer coordinated Smelik's care. While the jury agreed with the negligence allegation, it found no evidence of fraud.

The focus on case management was the tactic that set the case apart from previous lawsuits that were dismissed as a result of a U.S. Supreme Court decision last year, attorneys representing the plaintiffs said. In Aetna Health Inc. v. Davila, the high court said the federal Employee Retirement Income Security Act of 1974 had preempted a Texas law that allowed health plan liability lawsuits.

Since the Davila ruling, other federal courts reviewing similar cases have followed the Supreme Court's lead, declaring cases where patients sued their HMOs to fall under ERISA guidelines, which forced the cases under federal jurisdiction. That has usually led to the cases then being dismissed.

"I've had people say to me, 'You've found a loophole,' " Dr. Mittler said. "But this case did not involve denial of care. It involved mismanaged managed care. If this was purely a denial-of-care case and they didn't do anything else wrong, it probably would fall under ERISA and it would have been removed to federal court."

Smelik's husband and two children also named two physicians, Alamo City Medical Group, and the group's affiliated IPA in the lawsuit. Each of those individuals and groups settled before trial, but in its deliberations, the jury assigned responsibility to those parties as it calculated the HMO's responsibility.

The jury found that family physician Michael W. Mann, MD, would have been responsible for 50% of the damages and the medical group would have been responsible for 15%. The second physician was found not to be responsible.

After the initial 10-2 verdict, the jury planned to consider punitive damages in a separate trial, but Humana and the Smeliks agreed to settle those damages for $1.6 million. That is in addition to the amount the jury awarded the family from the company.

Appeal possible

The settlement, however, does not preclude the HMO from appealing to a higher court. No money would be paid out until after appeals are exhausted. A Humana spokesman said the insurer expresses sympathy to the Smelik family, but "we intend to vigorously appeal the verdict."

"The evidence showed Humana acted responsibly as a health benefits company," company spokesman Ross McLerran said. "We approved every physician and hospital referral and paid every medical claim."

Dr. Mann supported Humana's assertion, saying the insurer did not belong as a defendant in the case. He said he wanted his case to go to trial as well, but his liability insurer chose to settle.

"Mrs. Smelik was a very, very sick woman with multiple symptoms, and as far as I'm concerned, Humana had nothing to do with that case," said Dr. Mann, who practices in Bulverde, Texas.

"I can't deny Mrs. Smelik died while she was under our care, but that doesn't mean [the care] was the cause of her death. The cause of her death was she was very sick."

Executives from Alamo City Medical Group did not return calls seeking comment.

Dr. Mittler said Smelik had several health problems in addition to kidney disease, including emphysema and circulatory complications. Her many chronic conditions meant she was a candidate for case management, which Smelik's husband and children allege that the HMO did not provide.

"This case wasn't about suing doctors, but unfortunately, you have to sue everyone involved," Dr. Mittler said. "Our primary target was Humana. Part of Humana's defense was pointing the finger at the doctors."

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Case at a glance

John Peter Smelik, individually and as executor of the estate of Joan Diane Smelik; Janice Ann Smelik and John Andrew Smelik Sr. v. Michael W. Mann, MD; Fred C. Campbell Jr., MD; Alamo City Medical Group, PA; Alamo City Medical Group IPA, PA; Alamo City Medical Corp.; San Antonio Physician's Alliance; and Humana Health Plan of Texas Inc.

Venue: Bexar County (Texas) District Court
At issue: Whether an HMO failed to provide case management services as it promised in its member handbook and if so, whether the plan should be found negligent in a wrongful death case. A jury said yes to both questions.
Impact: Attorneys for the plaintiffs say the verdict is a victory for patients and gives physicians a better chance to compel an insurer to approve treatments and perform its case management duties. But some experts say the verdict may prompt HMOs to take a more active role in clinical care, leading health plan employees to second-guess physician decisions.

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