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MONDAY, June 21 (HealthDayNews) -- The U.S. Supreme Court handed health insurers a victory Monday by ruling that patients cannot sue them in a state court for malpractice or negligence damages.

The justices, in a unanimous decision dealing with both health care and federalism, said that a U.S. law passed 30 years ago trumps various state laws governing patients' rights to sue health plans.

While supporters say that limiting lawsuits will save everyone in the long run, critics see the decision as a major blow to patients' rights.

"Millions of families... who receive health care from private employers are now at very limited mercy of the HMOs," George Parker Young, the attorney representing the two plaintiffs, said in a statement.

Insurance plans and employers, on the other hand, applauded the ruling.

"It will preserve employer-provided benefits," said Kate Sullivan Hare, executive director of health care policy at the U.S. Chamber of Congress in Washington, D.C. "Employers are not going to put themselves on lawsuit tenterhooks for something they provide voluntarily. This will help preserve coverage in an increasingly litigious environment and help keep that coverage more affordable. If you inject more lawsuits into any kind of business practice, costs are going to go up."

Added Susan Pisano, a spokeswoman for America's Health Insurance Plans, an industry group: "We have characterized it as a victory for health-care consumers and employers. Encouraging more lawsuits unnecessarily puts coverage for more workers at risk. We think that this ruling really puts the brakes on efforts by trial lawyers to turn every question about the scope of individuals' coverage into a question about costly lawsuits."

But Linda DeBenedictis, president and founder of the New England Patients' Rights Group, in Norwood, Mass., said, "It's an outrage for consumer rights. Consumers have limited rights as it is, and they are losing benefits daily. Without the ability to enforce HMOs, this is going to lead to more abuses."

The issue essentially boiled down to whether such cases fall under federal law, where damages tend to be capped, or state law, where juries are more likely to award sizable damages.

While national patients' rights legislation has not managed to pass through Congress, various states have enacted their own patient protection laws.

Juan Davila and Ruby Calad were the two initial plaintiffs who sued under one such law, the Texas Health Care Liability Act (THCLA). Davila belonged to Aetna Health Inc. and Calad to Cigna Healthcare of Texas.

Davila's physician had prescribed Vioxx to relieve arthritis pain. Because Aetna refused to cover the cost, Davila took Naprosyn instead, and allegedly suffered a severe reaction requiring hospitalization, his lawsuit stated.

Calad had undergone a hysterectomy and was discharged earlier than her doctor advised because Cigna would not cover hospitalization costs. Soon after her discharge, she suffered complications and ended up in the emergency room, according to her lawsuit.

"The doctor was very upset because they [Cigna] overrode his decision as well," Calad told HealthDay after hearing of the high court's ruling.

Davila and Calad brought separate suits in Texas state court, arguing that the insurers' refusal to cover the services violated their "duty to exercise ordinary care when making health care treatment decisions," and that these refusals "proximately caused" their injuries.

The insurance companies, however, moved to have the cases heard in federal court, arguing that they fell within the Employee Retirement Income Security Act (ERISA), which Congress passed in 1974. The insurance companies initially won their case, and Calad and Davila appealed.

"In fact, ERISA absolutely pre-empts state liability laws in these cases when it comes to benefits coverage," the Chamber of Congress' Sullivan Hare said.

The plaintiffs have a different view.

"By rejecting this 1997 Texas law that passed with overwhelming bipartisan support, the court provides the HMOs with another tool to be used against the millions of workers and their families covered by ERISA," Young's statement read. "The court's decision reverses the progress made by the 11 states that since 1997 have enacted legislation intended to hold HMOs accountable for defective medical decision."

Calad, Davila, and Young are hoping the ruling will revive a movement in Congress to pass patients' rights legislation, which has champions in Sens. Edward Kennedy (D-Mass.) and John Edwards (D-N.C.).

"They're absolutely hopeful that this will breathe new life," said Erin Powers, a spokesman for the plaintiffs. "They are urging Congress to re-open this issue because there is a regulatory vacuum."

More information

For more on ERISA, visit the U.S. Department of Labor.

(SOURCES: Ruby Calad, plaintiff, Sugar Land, Texas; Kate Sullivan Hare, executive director of health care policy, U.S. Chamber of Commerce, Washington, D.C.; Susan Pisano, spokeswoman, America's Health Insurance Plans, Washington, D.C.; Linda DeBenedictis, president and founder, New England Patients' Rights Group, Norwood, Mass.; Erin Powers, plantiff spokesman, Houston; statement by George Parker Young, plaintiffs' attorney)

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