Political Intelligence



The patient’s bill of rights legislation being debated in Congress would give patients the right to sue their health maintenance organization for denying coverage–a right Texans have had since similar legislation passed in 1997.

Critics of the federal legislation make the same arguments that state opponents did four years ago. Governor Bush vetoed the legislation in 1995, saying it would open the floodgates to frivolous lawsuits. He fought so vigorously to sabotage the 1997 bill that Republican state senators complained on the floor of the state Senate. He eventually let the legislation become law without his signature. Now Bush is faced with the same issue at the federal level. He has agreed to the watered-down version of the bill that passed the House, but he says if Congress sends him a tougher bill, he will veto. He says the Senate version–which allows an employee to sue an employer if the business is the one directly making decisions about health insurance coverage, and has higher caps on damages–would raise HMO costs and “cause people not to be able to have health insurance.” In fact, because of all the restrictions typically included in such bills, the much vaunted–or feared–right to sue is not all it’s cracked up to be. In Texas, for example, only 20 cases have been filed under the 1997 Health Care and Liability Act. Of those, exactly one has made it to trial.

Part of the reason that Texas hasn’t seen the chaos in the courtrooms that Bush expected is because the law diverts complaints through independent review agencies, rather than sending them straight to court. Of the 3.9 million Texans with insurance plans, fewer than 1,400 have filed formal complaints against an HMO. By the end of May 2001, 58 percent of those who did file a complaint got the HMO decision fully or partially overturned through an independent review process.

Those who can’t resolve their complaints through independent review face an extremely expensive day in court. Medical malpractice cases involve thousands of documents, highly-paid expert witnesses and complex allegations of financial incentives influencing treatment decisions. The chances of beating the HMO are considered slim.

The overall effect of the 1997 Act is yet to be seen. According to the Texas Department of Insurance, the number of Texans with health insurance has increased since 1997, rather than plummeting as Bush expected. Meanwhile premiums have increased, but at a rate lower than the national average.

Some HMOs have skirted Texas law by having the suits filed against them moved to federal court, where they can be tried under the substantially weaker Employee Retirement Income Security Act of 1974. This law allows a plaintiff to recover only half the value of the denied benefit. In Texas, damages are limited by a tort reform measure passed in 1995, that caps rewards at $750,000 in punitive damages plus two times the amount of economic damages.


Last session the Texas Legislature nearly unanimously passed a law that requires the preservation of all biological evidence related to a criminal case. This includes DNA evidence, which is increasingly being used to exonerate defendants long after the original trial. But as reported in the Houston Press, the Harris County district attorney’s office says preserving every piece of DNA evidence from a trial is too burdensome, and that the evidence itself takes up too much space. To get around the new law, the DA’s office has drafted a waiver in which defendants can relinquish their right to the preservation of DNA evidence, as well as waiving any future objections related to the issue.

Why would they want to do that? Prosecutors present the waiver to defendants during the plea bargain process, when the defendant is over a barrel. The message is clear: If you want a favorable deal, you must sign away your rights. But, as the Texas Criminal Defense Lawyers Association points out, there are many reasons a defendant may falsely plead guilty. Often, it is because prosecutors threaten to push for stiffer jail time or the death penalty if they don’t plead out. The new waiver will help ensure that those coerced into plea bargains never get a second chance.


In not one but two June decisions, the Texas Supreme Court ruled against consumers in favor of big business, rubber-stamping a company’s ability to get consumers to sign away their right to sue at time of sale–even if the company later breaches the sales contract through fraud and deceit.

In both cases, In Re: American Homestar of Lancaster, Inc. and Nationwide Housing Systems, Inc., and In Re: First Merit Bank, mobile home buyers filed suit against the manufacturers and, in the second case, against the seller. The defendants all argued that the plaintiffs had no right to sue, since they had signed binding arbitration agreements–effectively giving up their right to take the companies to court–as part of their original contract. And in both cases, the court chose to side with the businesses, citing a 1925 federal law allowing for arbitration and ignoring more recent rules designed to protect consumers from just such unfair business practices.

The 1925 arbitration law was meant to provide a faster, cheaper alternative to the court process, but according to Reggie James of the Consumers Union Southwest Regional Office, the old law “assumes equal bargaining positions,” not the clearly unequal matchup between a lone buyer and a corporate behemoth.

Arbitrators will not take cases on contingency as trial lawyers do; consumers have to pay for the service whether they win or lose. Nor are they prone to award headline-making damages for gross misconduct. This makes arbitration prohibitively expensive to consumers while posing a relatively toothless threat to business. Dan Lambe of the Austin-based consumer organization Texas Watch said the Texas Supreme Court “effectively slammed the civil courtroom door in the face of Texas consumers, locked it, and threw away the key when it rendered these decisions.”


In other arbitration news, some Texas nursing homes have begun pressing their residents to sign arbitration agreements waiving their right to sue for malpractice, negligence, abuse and the like. Attorney Roger Curme of the Nursing Home Advocacy Project says his office has been receiving complaints since the beginning of the year. The home usually asks only that a resident “sign or decline” such agreements, but recently one administrator actually packed up a resident’s belongings and threatened discharge if the resident’s daughter refused to sign. Confronted by Curme, the administrator insisted it was corporate policy for Medicare patients. Only after the Texas Department of Human Services’ long-term care hotline informed the administrator that his actions were illegal did the administrator back down.

“Residents cannot be forced to sign away their rights,” Curme said. “The push for these agreements comes from insurance companies.” Medicare and Medicaid, together the nation’s largest providers of funds for long-term care, also lose out under such agreements, since when court damages are awarded to plaintiffs receiving benefits from one of these agencies, the agency has the right to recover funds paid for care found to be substandard. Under arbitration, those monies are likely to be reduced–good for nursing homes and their insurance companies, bad for mistreated residents and the taxpayers supporting Medicare and Medicaid.

Tim Graves, president of the Texas Health Care Association, says while “arbitration and alternative dispute resolution are part of the landscape, discussed in terms of finding effective ways to settle out of court,” he’s not aware of “folks being pressured” into signing anything. Thus far no agreement has been tested in court, and although Curme believes they would not hold up, he worries that having a signed agreement in hand might still prejudice any jury award.