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Consumer Group Labels Norwood Proposal a Consumer-Protection Fraud; Urges House to Reject It

Aug. 2, 2001

Consumer Group Labels Norwood Proposal a Consumer-Protection Fraud; Urges House to Reject It

WASHINGTON, D.C. ? The national consumer group Public Citizen today criticized the Norwood amendment to the Ganske-Dingell Patients? Bill of Rights as a fraud because it continues to provide a legal shield to HMOs that deny medical care to their patients.

“The Norwood proposal is a consumer-protection fraud that looks much more like the weakened liability provisions of the Fletcher bill (H.R. 2315) than those of the original Ganske-Dingell-Norwood bill (H.R. 2563),” said Joan Claybrook, president of Public Citizen. “The result would be that HMOs continue to be subject to less accountability than any other person or business in the United States. We urge Congress to reject it.”

Public Citizen released a detailed analysis of the Norwood proposal showing that it would:

  • Continue the federal preemption of state law known as ERISA, which will continue to make it very difficult for patients to effectively hold HMOs accountable for medical damages and denials of coverage. A number of states have strong patients? bill of rights laws that would be nullified.
  • Virtually ban recovery of punitive damages in federal or state court for the most egregious denials or delays of care. This would allow HMOs to systematically deny treatment unless and until a patient pursues appeals, which could be used to indefinitely delay recovery.
  • Cap punitive damages at $1.5 million in the few instances in which they would be allowed.
  • Cap state law damages for pain and suffering (injuries such as lost child-bearing ability, disfigurement and loss of sight) at $1.5 million. Perversely, these caps ? like those for punitive damages ? would not affect the less seriously injured but instead would harm the most severely injured. Caps limit an HMO?s liability exposure, allowing HMOs to predict the consequences of denying care and accept them as a cost of doing business.
  • Ban class actions, which are needed to prevent HMO fraud. HMOs often make fraudulent statements to consumers about coverage issues. Eliminating class actions would encourage more of fraudulent actions by HMOs.
  • Give HMOs the opportunity to choose between state and federal court as the forum in which to defend themselves.