HMO FAQs: What is an HMO? Can I sue my HMO for bad faith?
Can HMOs be sued for "Bad Faith Insurance?" Yes. We are proud that two of our cases, Smith v. Pacificare and Kotler v. Pacificare, confirmed that regardless of the differences between HMOs and insurers, HMOs are “in the business of insurance,” and can be sued for bad faith.
What is an HMO? What is a Health Care Service Plan?
HMO is the acronym for “health maintenance organization.” In California, HMOs are called “health care service plans.”
What makes an HMO an HMO is that the policyholder (usually called a subscriber or member) pays the HMO a premium in exchange for a promise of health coverage provided by the HMO. Some HMOs provide the coverage directly; others enter into contracts with doctors and hospitals to provide the care. The HMO does not own the facilities or employ the staff. Often, the medical group will not employ the doctors who belong to it either. Rather, the HMO will pay the hospitals and the groups a fixed amount each month based on the number of members enrolled in the plan.The hospital or group then agrees to provide care in exchange for this monthly payment.
In most cases, the providers decide what is covered and what is not covered, without any input from the HMO. (Although in most cases, the member can appeal the decision to the HMO.) The HMO is, in essence, nothing more than a middleman.
Can I sue my HMO / Health Care Service Plan for bad faith and punitive damages?
Yes. We are proud that two of our cases, Smith v. Pacificare and Kotler v. Pacificare, confirmed that regardless of the differences between HMOs and insurers, HMOs are “in the business of insurance,” and can be sued for bad faith. When an insurance company can be sued for bad faith, you may be able to sue for punitive damages in addition to economic damages.
Kotler v. Pacificare of California (2005) 105 Cal.App.4th 573, 129 Cal.Rptr.2d 526
View Summary | Download .pdfSmith v. Pacificare Behavioral Health of California (2002) 93 Cal.App.4th 139, 113 Cal.Rptr.2d 140.
View Summary | Download .pdf