A Texas family recently prevailed in a groundbreaking lawsuit filed against a health maintenance organization (HMO) over a medical malpractice claim. Herschel Pybas, 83, died at a hospital in 1999, days after his HMO, Cigna Healthcare of Texas, moved him from a nursing facility to his home. Plaintiff attorneys, who argued the transfer was cost motivated, presented evidence that revealed Cigna employees were awarded bonuses for keeping patients out of hospitals.

According to the lawsuit, Cigna officials assured Pybas' doctor that he would receive the same attention he was given at the nursing home, but attorneys argued that care was never provided. Pybas' condition worsened as soon as he arrived home. The jury awarded Pybas' family $3 million in actual damages and $10 million in exemplary damages.

Lawsuits against HMOs are rare due to the Employee Retirement Security Act of 1974, also known as "ERISA," a Federal law that restricts the majority of lawsuits against employer supplied medical insurance programs. Pybas' Cigna coverage, which was not offered by an employer, was an alternative to the Federal Medicaid benefits plan.