As the CEO of a $5 billion transportation company, when I need legal advice, I listen to the experts. Congress should do the same when it considers the Dingell-Norwood "Patients' Bill of Rights," which would allow patients to sue their HMOs but would also make employers liable in state court for the health care benefits they provide.
The sponsors claim their legislation includes an exemption to shield employers from liability, but Reps. John Dingell and Charlie Norwood are just dead wrong on that. A new study prepared by independent legal experts shows this so-called employers' "shield" is nothing more than a legal mirage that provides only the illusion of protection. In reality, very few companies could withstand the lawsuit exposure this bill would impose on every business in America.
David Kenty and Frank Sabatino, experts in employee benefits law and co-authors of the publication "ERISA: A Comprehensive Guide," found that under the Dingell-Norwood bill "employers would be subject to state law causes of action replete with jury trials, extra-contractual damages, and punitive damages." This would "dramatically change the way that group health benefits claims are litigated in the United States," conclude the authors. "Anyone who claims the contrary is simply failing to comprehend the thrust of the legislation."
Trial lawyers could initiate lawsuits against employers based on a number of legal arguments, according to Kenty and Sabatino.
First, plaintiffs could argue that insurance companies or third-party administrators are merely the agents of the employer and therefore -- shield language notwithstanding -- the employer is also responsible.
Second, a lawyer could argue that by selecting one health care provider over another, the employer's discretionary decisions played an integral part in a particular employee/patient outcome.
Third, most employers commonly retain the right to override the decisions of their health care provider or fiduciary to enable them to serve as patient advocates for their employees. The Dingell-Norwood bill would turn that relationship on its ear, forcing most companies to abandon their advocacy role altogether.
Supporters of the lawsuit provisions scoff at the notion that trial attorneys would abuse the health care system or employers who provide insurance. Tell that to the West Virginia convenience store that got hit with a $3 million judgment when one of its workers injured her back opening a pickle jar.
The likely epidemic of litigation this kind of legislation would generate creates an impossible choice for employers. They can continue to provide health care coverage and risk financial disaster if they find themselves on the losing end of a health care lawsuit, whether they had anything to do with treatment decisions or not. Or they can stop providing health care altogether.
In fact, according to a recent survey of small business owners, six out of 10 reported they would be forced to end employee coverage rather than face this risk. Today my company, Ryder, provides top quality health care benefits to 22,000 employees covering more than 80,000 people. We monitor employee satisfaction with our health care providers, and we act as a strong advocate for employees in disputes with these providers.
But if Dingell-Norwood passes, we will be forced to seriously reevaluate whether and how we can continue to offer health benefits to our employees. As with most businesses today, the exposure could simply be too severe for us. It would put our traditional employer-provided system of health care at extreme risk.
Add rising health care costs to this new threat of expensive litigation and it's clear that this legislation is a prescription for disaster. Last year health care costs went up 6 percent and the average employer spent $4,000 per employee on health care. This year, health care costs are expected to go up an average 9 percent, and potentially much higher for small businesses.
As a result, it will be harder for employers to offer health insurance and, as some costs are passed on, harder for workers to afford it. Research shows that every one percent increase in costs forces 300,000 more people to lose their health care coverage.
A lot of people agree that "right-to-sue" provisions don't make sense for either employers or employees. The U.S. Senate, 25 state legislatures and President Clinton's own hand-picked Health Care Quality Commission all refused to support similar provisions to expand liability.
Congress says it wants to make managed care more accountable, but Dingell-Norwood would only raise health care costs, increase the number of uninsured and punish the nation's employers who voluntarily provide health care to millions of American workers and their families.
This legislation isn't a "Patients' Bill of Rights." It's a devastating assault on America's health care system, and Congress should reject it.
The writer is CEO of the transportation services company Ryder System Inc.