Will Failed Expectations Lead to Litigation Post PPACA?

More than 8 million people have purchased health insurance plans through state-based and federally facilitated exchanges, and with only one in 10 people in the U.S. having a proficient level of health literacy, many of the individuals who have purchased plans have little to no understanding of the terms in their policy.

Just weeks before open enrollment for state and federal exchanges began last year, 42 percent of Americans were unable to explain a deductible and 62 percent did not know a HMO plan had greater restrictions than a PPO, according to a study by researchers at the University of Southern California's SchaefferCenter for Health Policy & Economics in Los Angeles. Researchers also found low-income and uninsured Americans — those most likely to benefit from the Patient Protection and Affordable Care Act — had the least awareness of health reform.

In a newly-designed environment like under the ACA, access to information during decision making is critical. "Patients need to understand exactly what they are buying when shopping for coverage, and yet, all too often, many of the new entrants to the market have limited, if any, experience with individual and family health plans," says Andrew Struve, JD, a partner at Manatt, Phelps & Phillips in Los Angeles who specializes in healthcare litigation. He says these new entrants either are not receiving complete and accurate information about the product benefits, or, often, simply do not have enough experience to know what questions to ask.

"Inevitably, once the ACA and the new models and products it has created have existed for a while, there will be those who are satisfied with the arrangements they made and those who are not," says Mr. Struve. It is very likely there will be disgruntled market participants who will choose to litigate their claims.

"Most lawsuits are born from failed expectations," says Mr. Struve, and that will be the cause of many lawsuits concerning the ACA in the future. There will be a certain number of the newly insured "who will conclude — rightly or wrongly — that they did not receive what they had contractually bargained for," and "in America, we sue over that."

Mr. Struve believes access to care will be the focus of many of the lawsuits brought by those who are dissatisfied with their health insurance plans. "It's one thing to buy health insurance on an exchange, but having insurance is meaningless unless you can find a provider who will accept it," he says.

Additionally, if a favored provider is not within a plan's network and is not treated as "participating," recently-enrolled individuals may claim insufficient disclosure of the identities of providers.

It is likely an increase in litigation concerning transparency and other issues relating to the ACA will increase costs for hospitals, says Mr. Struve. "But, it's worth remembering that, while risk and market turbulence may increase for some period, opportunities can increase as well," he says. "Smart, savvy, laser-focused hospital executives will deploy what forces they can to manage litigation risk, while positioning themselves to attempt to be 'winners' in the overall market evolution the ACA has precipitated." 

More Articles on the PPACA: 

Insurers Plan Premium Increases for PPACA Plan Enrollees 
5 Things to Know About New Health Insurance Enrollees 
Affordability, Competition and Choice in the PPACA Marketplaces: 5 Key Findings