[Congressional Record Volume 146, Number 93 (Tuesday, July 18, 2000)]
[House]
[Pages H6448-H6450]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  WHAT IS THE FATE OF THE NORWOOD-DINGELL-GANSKE BIPARTISAN CONSENSUS 
                    MANAGED CARE REFORM ACT OF 1999?

  The SPEAKER pro tempore (Mr. Hunter). Under the Speaker's announced 
policy of January 6, 1999, the gentleman from Iowa (Mr. Ganske) is 
recognized for 30 minutes.
  Mr. GANSKE. Mr. Speaker, 10 months ago this House of Representatives 
passed real patient protection legislation to correct HMO abuses. We 
passed the Norwood-Dingell-Ganske Bipartisan Consensus Managed Care 
Reform Act of 1999 with a vote of 275 to 151.
  So, Members ask, why is that bill not law yet? Why is not the 
congressional leadership leaning on the chairman of the conference 
committee to hold meetings? Is the conference dead? If so, then Senator 
Nickles should say so, so that we can move beyond the failure of the 
conferences committee.
  Mr. Speaker, every day that goes by without passage into law of a 
real patient protection bill means that people are being harmed by HMOs 
that care more about their bottom line, more about their most recent 
stock quotes on Wall Street, than they care about patients.
  Let me give some examples of people who have been harmed by HMOs. 
Before coming to Congress, I was a reconstructive surgeon. I took care 
of little children that were born with birth defects like this little 
baby with a cleft lip and palate.
  Do my colleagues know that in the last several years, more than 50 
percent of the surgeons who care for children born with this birth 
defect have had cases like these refused by HMOs, who call this a 
``cosmetic deformity''? This is a birth defect. The operation to repair 
this would be to restore towards normalcy. That is not a cosmetic case 
under any definition.
  A couple of years ago now this lady's case was profiled on the cover 
of Time Magazine. This woman lived in California. Her HMO did not tell 
her all that she needed to know. Furthermore, they put pressure on the 
Medicare center treating her not to tell her. Because she did not get 
that information in a timely fashion, and because her HMO did not play 
straight with her on getting her the treatment that she needed as 
medically necessary, she died. Today her children and her husband do 
not have a mother and a wife.
  A couple of years ago a young woman was hiking in the mountains about 
70 miles west of Washington, D.C. She fell off a 40-foot cliff. She 
broke her pelvis, fractured her arm, broke her skull, was lying at the 
bottom of this 40-foot cliff, when her boyfriend, who had a cellular 
phone, managed to get a helicopter in. They took her to the emergency 
room. She was treated. She lived.
  But then, do Members know what? The HMO would not pay her bill 
because she had not phoned ahead for prior authorization. Mr. Speaker, 
was she supposed to have a crystal ball that was going to tell her that 
she was going to fall off a 40-foot cliff so she could make a phone 
call to her HMO?
  I have shared these stories with my colleagues in the past, but I 
have some new ones tonight that are going to amaze my colleagues. This 
is also a story, a true story about a little boy. We can see him here 
tagging on his sister's sleeve. One night his temperature was about 104 
or 105 degrees, and his mother phoned the 1-800 number for their HMO 
and said, my baby needs to go to the emergency room. He is really sick.
  She got somebody thousands of miles away who said, well, I will only 
authorize you to take him to one emergency room. And when the mother 
asked where it was, the person said, I do not know. Find a map. It 
turned out that the HMO was about 60 or 70 miles away. En route, this 
little baby had a cardiac arrest.
  If one is a mom and dad driving this little baby to the hospital, 
Members can imagine what that was like. When they finally found it, the 
mother leaped out of the car holding her little baby screaming, save my 
baby, save my baby. A nurse came out, started resuscitation. They put 
in the i.v. lines, gave him mouth-to-mouth resuscitation, gave him the 
medicines, and they managed to bring his life back.
  All because that HMO did not have the common sense or decency to say, 
if your baby is really sick take him to the nearest emergency room, 
because en route, they passed three emergency rooms, but they were not 
authorized by that HMO, this little baby managed to survive, but 
because he had that cardiac arrest, he lost the circulation to his 
hands and his feet and he had to have both hands and both feet 
amputated.
  Why do 80 percent-plus of the American public think that Congress 
should pass an HMO reform bill, a patient protection bill, a real bill? 
Because their friends and neighbors have had problems just like some of 
those that I have shown the Members.
  A few years ago there was a movie, As Good as It Gets. In that movie 
Helen Hunt is talking to her friend, Jack Nicholson, and explaining how 
this HMO that they belong to will not properly take care of her son, 
who has asthma. Then she let loose a string of expletives that I cannot 
repeat on the floor of Congress, but I can tell the Members what 
happened in the theater that my wife and I were in. It happened all 
across the country. People started cheering and clapping and even 
standing up in applause, because they knew the truth of that 
allegation.
  No law has passed because the HMOs have spent over $100 million 
lobbying against real patient protection legislation. They have given 
generously to keep that legislation bottled up in conference committee.
  Even worse, the HMO industry is trying to get legislation passed that 
would undo the progress that is being made on behalf of patients in 
State legislatures and in the courts.
  The GOP bill that recently passed the Senate, the Nickles amendment, 
is worse than no bill at all. In fact, it is an HMO protection bill, 
not a patient protection bill. Would Members like some proof of this? 
Let me tell the Members about some of the things that have been 
documented in a recent article in Smart Money Magazine in their July 
issue.

                              {time}  2000

  Consider the case of Jim Ridler. It was shortly after noon on a 
Friday back in August 1995, and Jim Ridler, then 35 years old, had been 
out doing some errands. He was returning to his

[[Page H6449]]

home in a small town in Minnesota on his motorcycle when a minivan 
coming from the opposite direction swerved into his lane. It hit Jim 
head on. It threw him more than 200 feet into a ditch. He broke his 
neck, his collar bone, his hip, several ribs, all of the bones in both 
legs. It ripped his triceps muscle clean through.
  Over the next 4 months, after a dozen surgeries, he still did not 
know whether he would ever walk again, when he got a phone call from 
his lawyer who had started legal proceedings against the driver of that 
minivan who had swerved into his path.
  That call that he got from his lawyer really shook him up. ``I'm 
afraid I've got some bad news for you,'' said his lawyer. He told Jim 
that, even if Jim won his lawsuit, his health plan wanted to take a big 
chunk out of it that they had spent on his care.
  ``You're joking, right?'', said Jim.
  Nope, said the lawyer, Jim's health plan had a clause in its contract 
that allowed the HMO to stake a claim in his settlement, a claim known 
in insurance as subrogation.
  ``So I pay the premium, and then something happens that I need the 
insurance for, and they want their money back?'', Ridler asked 
incredulously. ``The way I figure it, my health insurance is just a 
loan.''
  Well, Ridler eventually settled his lawsuit for $450,000 which was 
all the liability insurance available. His health plan then took 
$406,000, leaving him after expenses with a grand total of $29,000.
  ``I feel like I was raped by the system'', he says.
  Do my colleagues know what, Mr. Speaker, most people are not even 
aware that these subrogation clauses exist until they have been in an 
accident and try to recover from a negligent individual like the person 
who almost killed Jim Ridler.
  Originally, subrogation was used for cases in which care was provided 
to patients that had no health insurance but who might receive a 
settlement. However, HMOs are now even seeking to be reimbursed for 
care that they have not even paid for.
  Susan DeGarmo found that out 10 years ago when her HMO asked for 
reimbursement on her son's medical bills. In 1990, Stephen DeGarmo, age 
10, was hit by a pickup truck while riding his bike to football 
practice near his home in West Virginia. That accident left him 
paralyzed from the waist down. His parents sued the driver, and they 
collected $750,000 in settlement plus $200,000 from the underinsured 
motorist policy. Now, that is to last this little boy the rest of his 
life as a paralyzed person.
  The health plan of Upper Ohio Valley wanted $128,000 in subrogation 
from Stephen's bills. Now Stephen's mother thought that that was a high 
amount, so she phoned the hospital in Columbus Ohio where Stephen had 
been treated, and she got an itemized list of charges. What she found 
out infuriated her. The HMO had paid much less than the $128,000 it was 
now seeking.
  Mrs. DeGarmo had found another dirty little secret of managed care, 
and that was that HMOs often use subrogation to go after a hospital's 
billed charges, the fee for full-paying patients, even though the HMO 
gets a discount off the billed charges.
  According to DeGarmo's lawyer, the health plan of Upper Ohio Valley 
actually paid $70,000 to treat Stephen. That meant they were trying to 
take $50,000 from Stephen's settlement that they had not even paid for. 
They were going to make money off this little boy who had become 
paralyzed.
  When the DeGarmos refused to pay, the HMO had the gall to sue them. 
Well, others found out about this HMO's action; and in 1999, the HMO 
settled suits for $9 million spread among roughly 3,000 patients that 
they had treated like the DeGarmos.
  Now, when HMOs get compensation in excess of their costs, I believe 
they are depriving victims of funds that those victims need to recover. 
This subrogation process has even spawned an industry of companies that 
handle collections for a fee, typically 25 percent to 33 percent of the 
settlement.
  The biggest of these subrogation collection companies is Louisville, 
Kentucky based Healthcare Recoveries, Incorporated. Last year, HRI, 
whose biggest customer, not surprisingly, is United Healthcare, 
recovered $226 million for its clients, and its cut was 27 percent.
  According to one former claims examiner for HRI, Steve Pope, the 
company is so intent on maximizing collections that it crosses the line 
into questionable practices.
  Take the case of 16-year-old Courtney Ashmore who had been riding a 
four-wheeler on a country road near her home by Tupelo, Mississippi. 
The owner of the bordering land had strung a cable across the road, and 
Courtney ran into it, almost decapitating herself. Her family collected 
$100,000 from the property owner.

  Their health plan paid $26,000 for Courtney's care. Steve Pope, the 
claims examiner for HRI, contacted the family's lawyer and wanted that 
$26,000 back. The lawyer asked for a copy of the contract showing the 
subrogation clause. Well, they could not find a copy of the contract. 
So Mr. Pope told his supervisor at HRI of this, and he was told to send 
out a page from a generic contract that did have a subrogation clause 
in it.
  Later, Pope found out that Courtney's health plan did not, in fact, 
mention subrogation. Still, he has testified, he was told to pursue the 
money anyway.
  Steve Pope has testified, ``These practices were so widespread, and I 
just got tired of being told to cheat and steal from people.''
  Well, Mr. Speaker, the notion that subrogation should be prohibited 
or at least restricted is gaining ground. Twenty-five States have 
adopted doctrine that injured people get fully compensated before 
health plans can collect any share of personal injury money.
  In March, a Maryland appeals court went even further. It ruled that 
the State's HMO Act prohibits managed care companies from pursuing 
subrogation at all. The court said, ``An HMO, by its definition, 
provides health care services on a prepaid basis. A subscriber has no 
further obligation beyond his or her fee.''
  So what did Senator Nickles' bill do to address this problem with 
subrogation? Did the Senate GOP bill try to make the system more fair 
for patients? Did it protect those State laws which are being passed to 
prevent subrogation abuses by HMOs?
  Oh, no, Mr. Speaker. The Senate GOP goes even further than 
subrogation in protecting HMOs. It says that the total amount of 
damages to a patient like Jim Ridler or Steve DeGarmo or Ashley 
Courtland would be reduced by the amount of care cost whether they have 
a subrogation clause in their contract or not. In other words, the 
Senate GOP bill that passed a couple weeks ago would preclude State 
laws being passed on subrogation entirely.
  If that were not enough of a sop to the HMO industry, the Nickles 
bill says that the reduction in the award would be determined in a 
pretrial proceeding and that any evidence regarding this reduction 
would be inadmissable in a trial between the injured patient and the 
HMO.
  What does that mean? Well, let us say one is hit by a drunk driver 
while crossing the street. One's HMO subsequently refuses to pay for 
necessary physical therapy, even though these are covered services 
under one's employer's plan. So one files two separate lawsuits, one 
against the drunk driver in the State court and the other against the 
HMO in the Federal court, because the HMO is not treating one fairly.
  The civil case against the drunk driver is delayed because criminal 
charges are pending against him. If the Federal case proceeds to trial, 
under the Senate GOP bill, the Federal judge would have to guess how 
much a State jury would award one, and the Federal judge would have no 
way of knowing what one might actually collect.
  This collateral source damages rule in the Nickles bill would leave 
patients uncompensated for very real injuries. For example, if one is 
injured in a car accident by another driver who has a $50,000 insurance 
policy, but one has medical costs of $100,000 that one's HMO refuses to 
cover when one goes to collect the $50,000 from the negligent driver, 
one might get nothing. Why? Because whether one has brain damage or 
broken legs or one's loved one is dead, one gets nothing because, under 
the Senate GOP bill, the HMO gets to collect all $50,000, even though 
it denied one necessary medical care for

[[Page H6450]]

 one's injuries, and one does not get a penny.
  Mr. Speaker, the Senate GOP bill values the financial well-being of 
the HMO more than it values the well-being of the patient. That is only 
part of the reason why I say that Senate GOP bill is an HMO protection 
bill, it is not a patient protection bill.
  Mr. Speaker, we can do a lot better than that. The House did a lot 
better than that. It passed the Norwood-Dingell-Ganske Bipartisan 
Consensus Managed Care Reform Act of 1999. Mr. Speaker, we better do 
better than that Senate GOP bill, because the voters are watching; and 
because their friends and family members are being injured by HMOs, and 
we need to fix this.

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