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HMO and Managed Care Law

Illinois Applies Liability for Corporate Negligence to HMOs - Jones v. Chicago HMO Ltd. of Illinois, 191 Ill.2d 278, 730 N.E.2d 1119 (Ill. 2000)

This is an important case that applies institutional negligence to HMOs and also has an excellent general review of the law of institutional negligence in health care. The Illinois Supreme Court has been one of the most influential in establishing the responsibility of corporate health care providers. The landmark decision in Darling v. Charleston Community Memorial Hospital, 33 Ill.2d 326, 211 N.E.2d 253 (1965) established the modern law of hospital direct liability for the actions of its staff and vicarious liability for the actions of improperly supervised independent contractor physicians. Jones v. Chicago HMO extends liability for corporate negligence to MCOs, and also provides an important review and restatement of the law of corporate negligence for all health care providers.

The medical facts of this case are simple: plaintiff was insured through defendant Chicago HMO, which was a contractor with the Illinois public assistance program. Plaintiff was assigned a physician, Dr. Jordan, by the HMO. At the time of the incident, public assistance patients insured by defendant were not allowed to choose their own physicians. On January 18, 1991, plaintiff's three-month-old daughter Shawndale was ill. Plaintiff called, called Dr. Jordan's office, as she had been instructed to do by Chicago HMO, and related Shawndale's symptoms, specifically that she was sick, was constipated, was crying a lot and felt very warm. An assistant advised Jones to give Shawndale some castor oil. When Jones insisted on speaking with Dr. Jordan, the assistant stated that Dr. Jordan was not available but would return her call. Dr. Jordan returned Jones' call late that evening. After Jones described the same symptoms to Dr. Jordan, he also advised Jones to give castor oil to Shawndale. On January 19, 1991, Jones took Shawndale to a hospital emergency room because her condition had not improved. Chicago HMO authorized Shawndale's admission. Shawndale was diagnosed with bacterial meningitis, secondary to bilateral otitis media, an ear infection. As a result of the meningitis, Shawndale is permanently disabled.

Plaintiff filed claims against Dr. Jordan, Chicago HMO, and others. The core of her action is a medical malpractice claim against Dr. Jordan for failing to see and properly evaluate Shawndale, for which she has expert testimony. This appeal concerns only counts I and III of Jones' second amended complaint, which are directed against Chicago HMO. Count I charges Chicago HMO with institutional negligence for, inter alia, (1) negligently assigning Dr. Jordan as Shawndale's primary care physician while he was serving an overloaded patient population, and (2) negligently adopting procedures that required Jones to call first for an appointment before visiting the doctor's office or obtaining emergency care. Count III charges Chicago HMO with breach of contract and is based solely on Chicago HMO's contract with the Department of Public Aid. Plaintiff does not have specific expert testimony on these institutional negligence claim, but did present factual evidence to support her allegations. The circuit court granted summary judgment for Chicago HMO on all three counts. On appeal, the appellate court affirmed the grant of summary judgment as to counts I and III, but reversed the grant of summary judgment as to count II, and Chicago HMO did not challenge the appellate court's reversal of count II, leaving only counts I and III at issue in this appeal.

The court's analysis is notable for not mentioning ERISA preemption. Instead, the court's analysis starts with a review of institutional negligence as developed for hospitals, starting with the Darling case. The court stresses that institutional negligence is just an extension of traditional tort law and is extended to institutions as they take on responsibilities that include possibility of injuring people thought torts. Thus Darling was driven by recognition that hospitals had become more than physician workshops, and notes that HMOs are heavily involved in patient care decisions, beyond the provision of insurance services. Defendant in this case is an IPA model and both assigned physicians to patients and had some supervisory role in the care they provided, thus it had stepped well outside the ERISA preemption umbrella. In analogous cases such as Lancaster v. Kaiser Foundation Health Plan, 958 F. Supp. 1137(E.D. Va. 1997), courts have found insurers vicariously liable for the actions of physicians they hold out as their own. This court takes the next step and finds that institutional negligence should be applied to HMOs that do not meet the standard of the ". reasonably careful HMO under the circumstances."

The court then turns to plaintiff's evidence of institutional negligence, and the defendant's claims that plaintiff must prove such claim by expert testimony. (Plaintiff's medical expert did not express an opinion on the institutional negligence claim.) Plaintiff made two allegations of institutional negligence: Chicago HMO (1) negligently assigned more enrollees to Dr. Jordan than he was capable of serving, and (2) negligently adopted procedures requiring Jones to call first for an appointment before visiting the doctor's office. Plaintiff argues that she does not need expert testimony on these points because other evidence established the appropriate standards of care. In this case, the court looked to the defendant's own documents and their staff's testimony. In one case, they indicated that there should be a primary care physician to every 3,500 patients, and in their contract with the state to provide services, they promised to have a primary care physician for every 2,000 patients. Since defendant's medical director testified that patient load could influence standard of care, and since defendant's own records indicated that Dr. Jordan might be assigned to more than 4,500 patients (and other testimony indicated that it might more than 6,000), the court found that this raised an issue for the jury and summary judgment was inappropriate. The court agreed with the dismissal of plaintiff's others claims, but remanded for trial.

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