Testing Utilization Review Quicksand

Can utilization reviewers be held responsible when their money-saving decisions hurt people?

The utilization review business is so new that this still is murky legal ground, but a closely watched case working its way through the Southern California courts should help settle the question.

While other lawsuits have been filed, this one is viewed as a test case. If the courts ultimately decide that utilization review companies must pay for their mistakes, experts believe it could let loose a spate of suits.

The California case involves Howard Wilson Jr., 25, who was admitted to College Hospital in Los Angeles in 1983 for treatment of drug dependency, depression and anorexia. His doctor recommended that he stay in for three to four weeks but, after 11 days, a utilization review firm cut off hospital payments.

Unable to afford further care, Wilson was discharged. He committed suicide 20 days later. His parents sued the utilization review company and insurance companies.

A judge in Los Angeles County Superior Court dismissed the case, but the California 2nd District Court of Appeal disagreed and ordered a trial, which began in April. It ruled that the utilization review firm “could be at least partially liable if negligent conduct was a substantial factor in bringing about the suicide.”