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Friday, June 23, 2000, 12:00 a.m. Pacific 

Suit claims HMO misleads patients 

by Carol M. Ostrom 
Seattle Times staff reporter 
Patients who belong to Kaiser Permanente health-maintenance organizations aren't being told the truth about how their doctors make decisions about their health care, according to a class-action lawsuit filed yesterday in U.S. District Court in Seattle. 

Kaiser plans provide health insurance and medical services to about 8 million people in the U.S. Its HMOs serve 440,000 people in the Northwest, including about 91,000 people in Washington, most in the southwestern part of the state, through Northwest Permanente. 

Although Group Health Cooperative in Seattle has a relationship with Kaiser, it was not named in the lawsuit. 

Information distributed by the plans, the lawsuit alleges, leads potential subscribers to believe that their doctors are free to make independent medical judgments about what care and procedures are "medically necessary." 

In fact, the lawsuit says, Kaiser imposes on those doctors a number of restrictions and financial incentives meant to cause them to limit care. 

For the consumer, that amounts to a "bait-and-switch" scheme, says lawyer Lynn Sarko, who filed the case on behalf of Richard Peterson, a Kaiser plan subscriber from Southwest Washington. 

By such restrictions and incentives, as well as by evaluating medical procedures on "undisclosed cost-based criteria," says Sarko, Kaiser plans don't provide the coverage consumers thought they were buying. 

Last week, the U.S. Supreme Court ruled that people couldn't sue HMOs for using cost considerations to limit medical care. But it left the door open to lawsuits based on an HMO's duty to disclose information about "characteristics of the plan and of those who provide services to the plan" if that information affects patients. 

Beverly Hayon, Kaiser Permanente's national media director, said she hadn't seen the lawsuit and couldn't comment on it specifically. But, she said, Kaiser is not simply an insurer but a provider of medical services as well and provides "fully integrated" care. 

"When it comes to medical care, those decisions are 100 percent in the hands of the physician," she said. "Do our doctors check in with somebody before they decide what they will or won't do? Absolutely not. That doesn't apply to us in any way, shape or form." 

Matthew Schiffgens, a Kaiser spokesman, said payment arrangements are made between health plans and medical groups, not with individual doctors. And in a similar lawsuit filed against Kaiser in Texas in 1997, the federal circuit court found that Kaiser had no duty regarding disclosure. 

Many Kaiser plans around the country have won kudos in patient-satisfaction surveys; earlier this year, the HMO began a voluntary external review process available to members who dispute denials of requested treatments or referrals. 

But according to Dr. Lynn Peeno, a former HMO medical director who is now a Kentucky-based health-care ethics consultant, many patients are naive when it comes to what goes on behind the scene in HMOs. 

"I think there's still the belief that my doctor is taking care of me and will take care of me the way medicine has always taken care of me, and my doctor would never put anything before my medical care," she said. "I don't think people in the public completely understand how organized the system is in a health plan to limit the amount of care as the primary means to cut costs." 

Peeno, who has testified for plaintiffs in a number of lawsuits against HMOs, said she believes the duty of an HMO to disclose relevant information about how decisions are made in its system is analogous to "informed consent" in the realm of medical procedures or research. 

"You simply cannot do anything to a patient in a medical context without fully informing them, whether it's research or treatment," she said. 

But when it comes to how their HMO doctor makes decisions, she said, patients aren't given straight answers to the most basic questions, such as: "How much is this doctor controlled by the HMO? What is the payment arrangement? Where does this doctor go to know what decision to make about you medically?" 

According to the lawsuit, accurate disclosure of nonmedical criteria used to limit care would allow members of the HMO to "weigh their physician's recommendations more accurately, to investigate treatment options more aggressively, and to exercise more intelligently their right to pay out of their own pocket for medical care . . . ." 

Copyright 2000 The Seattle Times Company