The HMO Mandatory Prevailing Party Attorney Fee Statute -
Interference with the Florida Constitutional Right of Access to the Courts

by Lawrence D. Bache

A woman requests legal assistance because her health maintenance organization (HMO) is discontinuing medical treatment it has deemed to be no longer medically necessary. 1 After listening to her describe her illness, the nature of the treatment she has been receiving, and after reviewing the relevant provisions of her HMO booklet, you believe the HMO has no proper basis to deny medical treatment. The woman has exhausted the HMO's grievance procedure, the response to her request for assistance from the Florida Department of Insurance has not been favorable, and the denial is ripe to be challenged in court. She is however without the ability to pay your attorney's fees and is barely able to pay a minimum retainer to cover the filing fee and associated costs. You are interested in taking her case and have some familiarity with the Florida Insurance Code which provides that reasonable attorney's fees are awarded to counsel rep-resenting an insured who prevails against his/her health carrier for wrongfully denying claims, etc.2

You are aware that in a statutory action by a participant or beneficiary for an administrator's wrongful denial of health (or other plan) benefits under the Employee Retirement Income Security Act of 1974 (ERISA), the statutory discretionary reciprocal prevailing-party attorney fee provision may result in an award of attorney's fees to a prevailing plain-tiff (participant or beneficiary), but generally not to a prevailing defendant. 3 Before agreeing to take her case, you research the Florida statutory provisions governing HMOs, and discover that in the event you do not prevail in an action brought on behalf of this woman, the HMO shall recover from her attorney's fees it incurred in defending the case. Specifically §641.28 Fla. Stat. (1995) provides:

In any civil action brought to en-force the terms and conditions of a health maintenance organization contract, the prevailing party is en-titled to recover reasonable attorney's fees and court costs.

The above-cited mandatory prevailing party attorney provision of the HMO statute extinguishes, and/ or at least inhibits a member's right to challenge a denial of benefits in court. This right of access to the courts is important because the legislatures' well-intentioned attempt to provide consumer protection to HMO subscribers is inadequate. Particularly, although the statute man-dates that every HMO establish and maintain a procedure that will facilitate the resolution of member grievances that includes both formal and informal steps within the organization, 4 it must be noted that the HMO has a strong incentive in upholding an initial denial of benefits, i.e., a profit motive furthered by saving costs. In addition, the Florida Department of Insurance does not generally favorably respond to a request for assistance because that govern-mental agency does not have the re-sources to properly determine complex medical questions such as whether a treatment is medically necessary, experimental, or investigational, etc.

In almost all instances, the relative financial positions of the sub-scriber and his/her HMO are unequal, and a denial of treatment or a refusal to pay for treatment frequently has serious consequences, sometimes life threatening. Further, an HMO contract, like insurance, is a specialized type of agreement under which a subscriber (member), like an insured, must meet his/her performance obligations by regularly paying premiums while the performance obligations of the HMO arise, if at all, only in the event medical treatment is required.

The Florida Constitution provides that "[T]he courts shall be open to every person for redress of any injury, and justice shall be administered without sale, denial or delay."5 Access to the courts to challenge the propriety of a denial of benefits is a constitutional right that should not be abridged. The mandated loser pay attorney-fee provision contained in §641.28 may render this right meaningless.

Endnotes:

1 A denial of benefits on the basis that the treatment was experimental or investigatorial or a refusal to pay for treat-ment already received on the basis of a pre-existing condition or other contract exclusion would generally present the same scenario.
2 §627.428 Fla. Stat. (1989).
3 Employee Retirement Income Security Act of 1974, §502(g), 29 USCA §1132(g).
4 §641.22(9) Fla. Stat. (1995).
5 FLA. CONST. Art. I §21. (1985).