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Supreme Court Rejects Federal Suits against HMOs

The Supreme Court ruled yesterday that patients cannot sue HMOs in Federal court for giving doctors financial incentives to hold down treatment costs. Reversing a Federal Appeals Court decision that argued such suits could be allowed, Justice Souter, writing for a unanimous Court, concluded that Congress's intent in passing a 1973 law paving the way for HMOs was to affirm the entire concept of managed care, including its emphasis on creating profitability by keeping costs down. The court ruled that an Illinois woman could not sue her HMO under federal law for putting in place incentives that encouraged her doctor to delay diagnostic treatment of what would eventually become a ruptured appendix. The High Court was not swayed by the Court of Appeals's argument that one could distinguish between financial incentives that resulted in inappropriate or inadequate care and those that did not.
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