California Doctor Fires Shot Across Bow of HMO Industry

Doctors, lawyers, and patients say the case could be a major turning point in the history of managed health care. Operators of health-maintenance organizations (HMOs), medical groups, and managed-care facilities say the case is too specific to draw broad generalizations.

Either way, a $2.5 million settlement - accepted this week by a San Diego pediatrician who was fired from his medical group for allegedly spending too much time with patients - is attracting nationwide attention.

The case involves Thomas Self, a pediatric specialist for 28 years, who contended in a 1995 lawsuit that he was fired by his medical group for advocating too much care for his patients. Dr. Self says his firing came a dozen years into his tenure with a San Diego medical group, Children's Associated Medical Group (CAMG), after officials chastised him for ordering too many tests and spending more time with patients than officials wanted.

"I believe this was an effort to rid themselves of an obstacle on that path to maximizing profits," Self said.

Invoking a 1992 California law protecting physicians from such kinds of retaliation, Self won $1.75 million from a San Diego superior court jury April 14 in compensation for wrongful termination and defamation. The same jury was set to announce punitive damages this week before Self and CAMG settled for $2.5 million out of court.

The case provides tangible evidence of public disfavor - via a substantial jury award - over abuses within the managed health-care industry, observers say.

HMOs and various forms of managed care have grown during the past decade because they save money by using a centralized administrative umbrella and allowing physicians to set amounts in advance for overall health care.

But critics say such organizations are profit-driven and pressure physicians to pursue the least-expensive treatment. And they say the huge jury award and settlement in the Self case send a message to managed-care providers.

"I hope the HMOs will take a look at this and learn to change their attitudes and procedures when it comes to pressuring doctors to deny proper medical treatment to their patients," says Rep. Martin Gallegos, chairman of the California State Assembly's Health Committee. "This shows they are going to have to pay the price if they don't."

Some HMO advocates, however, say the Self case is an isolated incident that had nothing to do with managed care.

"The medical-delivery system in this country has become so complicated and confusing that people are drawing too many conclusions from isolated problems," says Richard Bruno, acting chief executive officer for one of the largest HMOs in California. "Trying to generalize problems with all kinds of managed care from the Self case is unfair."

But doctors are easy to find who say they are pressured to try to cut costs wherever possible. John Roark, president of the California Physicians Alliance, notes that medical group officials have say over what procedures doctors use - but no accountability when such procedures fail. "The Self case is a beacon of hope that such a situation will change," he says.

In fact, it is also among the first cases to successfully invoke measures passed to stop doctors from being punished for patient advocacy. So-called "anti-retaliation" laws are on the books in over 20 states but most remain untested.

"This case is very significant because it is showing doctors everywhere they have a means of standing up to HMOs and saying, 'You can't order me to do what I know is wrong,' " says Elizabeth Jagla, president of the California Society for Health Care Attorneys. Although she says the case is a strong moral victory for doctors, Jagla says the specifics of the Self trial may keep it from becoming a legal precedent.

HMOs will likely ride this out, she says, but "they've learned they can't just kick physicians around without the fear of retaliation and due process."