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California Court Says Patients Can Sue Medicare HMOs

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JULY 16, 2001 VOLUME 9, NUMBER 3

George and Barbara McCall, California residents, sued their HMO and their primary care physician. They claimed that the HMO (PacifiCare of California) refused to refer Mr. McCall to a specialist when he needed a lung transplant, and that he was ultimately forced to disenroll from PacifiCare and seek medical care through Medicare. PacifiCare, for its part, claimed that Mr. McCall’s sole remedy was to appeal through the Medicare process, and that he could not bring a separate lawsuit.

Mr. and Mrs. McCall signed up with PacifiCare as a Medicare HMO—they were covered by Medicare and chose the HMO in order to reduce co-payments and deductibles. Their lawsuit alleged that PacifiCare violated its duty to provide referrals consistent with good medical practice, allowed its medical decisions to be guided by fiscal and administrative decisions, and encouraged Mr. McCall to leave the program when he appealed the denial of medical care. The trial judge agreed with PacifiCare that those questions had to be addressed only to the Medicare agency, since that was the source of funding and control of the McCalls’ medical care.

The California Supreme Court disagreed. It pointed out that the review provided through Medicare is limited—Medicare HMOs are required to offer an administrative review process only to patients who are “dissatisfied because they do not receive health care services to which they believe they are entitled, at no greater cost than they believe they are required to pay.” That provision addresses only the availability and cost of services, and does not provide any review for medical malpractice, or breach of the HMO’s duty to provide care. Since those items are not covered in the Medicare appeals process, reasoned the Court, the common-law right to sue the health care provider must still be available to the patient. McCall v. PacifiCare of California, Inc., May 3, 2001.

The McCall case comes at a critical time for the Medicare program. Congress is currently discussing a “patient’s bill of rights” concept which incorporates the same ideas. Critics of the legal system claim that leaving HMOs open to litigation is just another way of driving up the cost of health care while lining the pockets of trial lawyers. Critics of the HMO and managed-care industry argue that refusing to allow Mr. McCall, and people like him, to sue their HMOs will lead to more abuses like those the McCalls believe they suffered.

Two of the Court’s seven justices dissented from the ruling. They argued that the law provides only one remedy for Medicare patients who are upset by the availability or quality of care—to appeal the denial through the Medicare process. In Mr. McCall’s case, that appeal would have been made to PacifiCare itself.

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Robert B. Fleming


Robert Fleming is a Fellow of both the American College of Trust and Estate Counsel and the National Academy of Elder Law Attorneys. He has been certified as a Specialist in Estate and Trust Law by the State Bar of Arizona‘s Board of Legal Specialization, and he is also a Certified Elder Law Attorney by the National Elder Law Foundation. Robert has a long history of involvement in local, state and national organizations. He is most proud of his instrumental involvement in the Special Needs Alliance, the premier national organization for lawyers dealing with special needs trusts and planning.

Robert has two adult children, two young grandchildren and a wife of over fifty years. He is devoted to all of them. He is also very fond of Rosalind Franklin (his office companion corgi), and his homebound cat Muninn. He just likes people, their pets and their stories.

Elizabeth N.R. Friman


Elizabeth Noble Rollings Friman is a principal and licensed fiduciary at Fleming & Curti, PLC. Elizabeth enjoys estate planning and helping families navigate trust and probate administrations. She is passionate about the fiduciary work that she performs as a trustee, personal representative, guardian, and conservator. Elizabeth works with CPAs, financial professionals, case managers, and medical providers to tailor solutions to complex family challenges. Elizabeth is often called upon to serve as a neutral party so that families can avoid protracted legal conflict. Elizabeth relies on the expertise of her team at Fleming & Curti, and as the Firm approaches its third decade, she is proud of the culture of care and consideration that the Firm embodies. Finding workable solutions to sensitive and complex family challenges is something that Elizabeth and the Fleming & Curti team do well.

Amy F. Matheson


Amy Farrell Matheson has worked as an attorney at Fleming & Curti since 2006. A member of the Southern Arizona Estate Planning Council, she is primarily responsible for estate planning and probate matters.

Amy graduated from Wellesley College with a double major in political science and English. She is an honors graduate of Suffolk University Law School and has been admitted to practice in Arizona, Massachusetts, New York, and the District of Columbia.

Prior to joining Fleming & Curti, Amy worked for American Public Television in Boston, and with the international trade group at White & Case, LLP, in Washington, D.C.

Amy’s husband, Tom, is an astronomer at NOIRLab and the Head of Time Domain Services, whose main project is ANTARES. Sadly, this does not involve actual time travel. Amy’s twin daughters are high school students; Finn, her Irish Red and White Setter, remains a puppy at heart.

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Matthew M. Mansour


Matthew is a law clerk who recently earned his law degree from the University of Arizona James E. Rogers College of Law. His undergraduate degree is in psychology from the University of California, Santa Barbara. Matthew has had a passion for advocacy in the Tucson community since his time as a law student representative in the Workers’ Rights Clinic. He also has worked in both the Pima County Attorney’s Office and the Pima County Public Defender’s Office. He enjoys playing basketball, caring for his cat, and listening to audiobooks narrated by the authors.