A Disabled Attorney's Novel Strategy Puts A Civil-Rights Spin on HMO Litigation
By MILO GEYELIN Staff Reporter of THE WALL STREET JOURNAL
Over lunch with a group of lawyers from the Texas Medical Association four years ago, attorney Robert Provan heard how doctors trying to treat chronically ill patients in managed-care plans were being dropped from their contracts, apparently for running up big bills.
Mr. Provan threw out an idea: Why couldn't the doctors sue under the Americans with Disabilities Act, the federal law that protects the chronically ill and other disabled people from discrimination? The law, he explained, extends not only to the disabled, but also to those with whom they have a relationship. "Can you think of a more important relationship that a person with a disability has," he asked, "than the one he has with his physician?"
From that chance exchange was born one of the more novel legal challenges now facing the managed health-care industry. Intrigued by Mr. Provan's theory, the Texas Medical Association backed him in a lawsuit against two leading health-maintenance organizations and a San Antonio physicians' group. Late last year, he also lined up the financial support of a powerful group of plaintiffs lawyers and, more important, the free professional services of three of its litigators. Now, Mr. Provan's suit, once considered a long shot, is scheduled for trial in March in federal court in San Antonio, and is poised to become a major test case.
The suit is on behalf of 10 chronically ill patients who contend they were denied quality medical treatment, as well as a doctor who says he was fired for trying to provide it. At issue is whether the physicians' group and the two HMOs, Humana Health Plans of Texas, a unit of Humana Inc., Louisville, Ky., and PacifiCare of Texas, a unit of PacifiCare Health Systems, Cypress, Calif., violated the ADA by limiting care for chronically ill patients because they are more costly to treat.
By making discrimination the issue, Mr. Provan has sidestepped the industry's traditional defense that disputes over quality of care at HMOs fall under the jurisdiction of the Employee Retirement Income Security Act. The federal law regulates employer-sponsored benefit plans and sharply curtails potential damages in lawsuits against HMOs. But in refusing to dismiss Mr. Provan's case, U.S. District Judge Fred Biery ruled in late 1998 that the financial incentives HMOs impose on providers to hold down costs can be the basis of a discrimination claim if the result is unfair treatment of the chronically ill.
By itself, that was a major victory. "It allows us to put medical decision-making into a civil-rights context," says Robert Griss, director of the Center on Disability and Health, a research and advocacy group based in Washington, D.C.
But for Mr. Provan, 55 years old, the significance was much more personal. The attorney, who weighs 85 pounds and is 4 feet 10 inches tall, was crippled by polio at age five. With the onset of postpolio syndrome in recent years, he sleeps with the aid of a respirator. But he says he owes his life to the extraordinary commitment of a Chicago surgeon who performed a series of novel surgeries that enabled Mr. Provan to walk without braces by age 10.
"I'm a living testament to what American medicine has been in the past and what I hope it will be in the future," he says. "But I often wonder if we had managed care back then, would I be here today?"
Humana and PacifiCare say none of Mr. Provan's clients can point to any care that was inappropriately denied, let alone to any act of discrimination. So does HealthTexas Medical Group of San Antonio, the 27-doctor group named as a defendant. A fledgling nonprofit when it was founded in 1994 by three brothers and a fourth physician, HealthTexas has grown into one of the biggest physicians networks serving the city's poor.
Robert, Rowland and Richard Reyna, Stanford Medical School graduates who grew up on the city's gritty west side, say they launched HealthTexas to provide community-based health care to San Antonio's large and underserved Hispanic population. "Our agenda is to take care of patients," says Robert Reyna, 50, the network's medical director.
An Unhappy Specialist
HealthTexas inadvertently set the Provan suit in motion in May 1986 by filing a $1 million claim against rheumatologist Jorge Zamora, whom it had fired three days earlier in an employment dispute. The Reynas contend Dr. Zamora tried to solicit former patients after he left, in violation of a noncompete agreement. They say the specialist was unhappy with his $150,000-a-year salary and his responsibilities as a primary-care physician.
But Dr. Zamora traces the dispute to his concern that chronically ill patients covered by Humana and PacifiCare plans weren't receiving adequate care because of cost-saving incentives written into the group's contracts with those plans. He claims disabled patients were targeted and, through harassment or neglect, encouraged to leave.
Some waited as long as six or seven hours for scheduled appointments, he says, and they had more difficulty than non-HMO members getting authorization for hospital admissions or referrals to specialists. He contends that his treatment decisions for HMO enrollees were second-guessed by the Reynas at weekly medical staff meetings, at which Humana and PacifiCare representatives were present.
Once, Dr. Zamora says in a deposition, Rowland Reyna told him -- in earthy language -- that Dr. Zamora didn't have the courage to deny a referral. Another time, he says, Robert Reyna threatened him with a salary cut when they disagreed over a hospital admission.
Martin Guerrero, another former HealthTexas physician who joined Mr. Provan's suit but was dismissed from it on procedural grounds, says that he, too, was grilled at the weekly meetings and pressured to keep referrals down. At one point, Dr. Guerrero says, he was expected to schedule 30 to 40 patients a day and get preauthorization for any procedure that would affect the network financially.
The Reynas declined to discuss specific allegations, but HealthTexas sued Dr. Zamora when he tried to contact his former patients -- which he says he did out of concern for their care. When HealthTexas won a restraining order barring him from opening a practice within two miles of any of the network's clinics, Dr. Zamora turned to the Texas Medical Association.
On the Lookout
Unbeknownst to him, the association was looking for a case to test Mr. Provan's theory that the ADA could be used by physicians to sue HMOs over contract terminations involving patient care. As soon as its general counsel, Donald "Rocky" Wilcox, heard about the Zamora case, he put in a call to Mr. Provan.
A former general counsel for the Texas State University system, Mr. Provan was an expert in cases involving discrimination against the disabled. Working out of the Austin office of a small College Station, Texas, firm, he had launched a popular monthly newsletter on the ADA. But he had no experience litigating against a major corporate defendant.
The more he talked to Dr. Zamora, however, the more the facts seemed to bear out his theory, Mr. Provan says. Humana's contract with HealthTexas for Medicare recipients, for example, paid the network a flat monthly fee per patient. But the group was entitled to bonuses pegged to keeping down hospital usage and average costs per patient for diagnostic tests, referrals to specialists, outpatient surgery and other medical services.
If HealthTexas held the cost of treatment per patient to $67 a month, for example, Humana paid a bonus of 75 cents each. But if HealthTexas held costs to less than $54, that bonus jumped to $3.
The Reynas say HealthTexas's contracts with Humana and PacifiCare have never influenced their treatment decisions. The network, while operated by the Reynas, is owned by a San Antonio nonprofit hospital organization, Christus Santa Rosa Health Care. HealthTexas physicians have no direct incentive to hold down costs, because they are paid flat annual salaries regardless of whether they meet HMO contract targets, says Robert Reyna, who adds that any retained earnings the group has "would go back to support medical care." He says his only financial interest is a modest stake in a management company that provides HealthTexas's administrative support.
But as Mr. Provan began interviewing patients, he was struck by the similarity of their complaints. Some cases, like that of Rita Barrientes, a 69-year-old Medicare recipient, involved potentially life-threatening conditions. When she signed up with Humana at HealthTexas in April 1995, she contends in the suit, she badgered Robert Reyna for a mammogram immediately, citing a previously detected abnormality and a family history of breast cancer. Nine months elapsed before she got her mammogram, only after being examined by Dr. Zamora. It showed a malignancy requiring a radical mastectomy.
In another case, Joe Garcia, a 26-year-old PacifiCare plan member paralyzed from the neck down, says he flipped out of his wheelchair three times before the safety bars he had asked for were provided. By the time HealthTexas and PacifiCare came through with a new electric bed, he had developed oozing pressure ulcers from his legs dangling off the end of his old one. And he claims that HealthTexas failed to phone in routine prescription refills for painkillers to his pharmacist. Instead, he had to take public transportation to the clinic to pick up the prescriptions himself.
In court documents, HealthTexas and the HMOs say all the plaintiffs eventually received the care they needed. Ms. Barrientes received her mammogram within 12 months of becoming a Humana plan member, as specified in her plan agreement. Mr. Garcia eventually got his wheelchair safety bars and a new electric bed.
"Despite all the allegations in this case that bad medicine was practiced, they couldn't find one that had suffered medical malpractice," says R. Jo Reser, a lawyer for HealthTexas at Jenkens & Gilchrist in San Antonio.
Cost controls are part of the trade-off that HMO members agree to in return for affordable premiums and access to care, the defense lawyers contend. The alternative for many patients, they say, would be no care at all. "The doctor groups don't have a lot of bargaining power" when it comes to contracts with HMOs, says Ms. Reser. "And so the question is, 'Why are we in this lawsuit?' "
Drs. Zamora and Guerrero concede they are aware of no policies at HealthTexas aimed at ridding the network of its high-cost, chronically ill patients. And they say all patients had long waits and referrals to specialists that were denied. But Mr. Provan contends that the pattern of patient care at HealthTexas had a disparate impact on the disabled. Even if there was no overt policy, he adds, patients may still be entitled to damages if the effect of the HMO's contract provisions resulted in unequal treatment.
But when it came to litigating against Humana, PacifiCare and HealthTexas, Mr. Provan found himself in over his head. He and his small firm had parted ways shortly before the suit was filed in May 1997, when Mr. Provan refused to move to the firm's headquarters. Suddenly, at age 52, he was a sole practitioner.
HealthTexas and its lawyers, taking the lead for the defendants, filed a raft of counterclaims against Dr. Zamora alleging tortious interference with current and future business relations, conspiracy, breach of contract and slander. They sought a court order to obtain all correspondence between Mr. Provan and lawyers for the Texas Medical Association, who were providing him with financial support and help preparing briefs. And they stalled Mr. Provan with procedural maneuvering and delays.
The suit has survived largely intact, but at a price. San Antonio medical malpractice attorney Peter Stanton volunteered his firm's support and helped win the critical ruling in late 1998 that set the suit on course for trial. But he withdrew from the case last year for financial reasons. "It's hard to run your office and do those kinds of cases," Mr. Stanton says.
To keep the case alive, Mr. Provan laid off a law clerk and office manager, enlisted his wife as his secretary, leased out part of his office space and borrowed against his retirement savings. By last fall, his and the Texas Medical Association's costs had exceeded $1 million. With no trial date set, Mr. Provan was running out of time and money when he heard about a coalition of plaintiffs lawyers that was mounting its own assault against managed care.
Many of the lawyers in the coalition, headed by Pascagoula, Miss., attorney Richard Scruggs, had represented states against tobacco companies in health-cost recoupment suits that netted hundreds of millions of dollars in attorney fees. With their sights now trained on HMOs, the lawyers convened at a Houston law firm this past October to discuss strategy.
Mr. Provan hopped a flight from Austin and waited outside the conference room as the meeting dragged on. By the end of the day, the 50 or so lawyers were impatient to fly home. Most had never met Mr. Provan or heard of his case. But when he walked through the room's large double doors and stood before its massive, marble-topped table, the lawyers fell silent.
"I told them how important I thought the work they were doing was to the American medical system," Mr. Provan says. "I said, 'For 3 1/2 years, I've been fighting this fight all alone against Humana and PacifiCare, two of the largest corporations in the United States, and a medical-services organization.' ... I said, 'I want to fight this fight and I want to fight it to the end, but I need help.'
"And so I said, 'I hope you can help me.' "