Patients' Rights

On June 29 the Senate approved legislation that would guarantee certain rights to Americans in managed-care health plans. The bill helps patients obtain coverage for visits to the nearest emergency room, access to medical specialists and medically necessary prescription drugs, and participate in clinical trials of experimental treatments. The bill also supports patient challenges to decisions by HMOs and insurance companies, including a review process and the right to sue over decisions that cause injury or death. The bill passed by a vote of 59-36 in spite of a threatened Bush veto. Having made the bill their top priority after gaining control of the Senate in early June, its passage was hailed by observers as a major victory for the Democrats. A BBC News headline proclaimed "Health vote shows Democrats' power."

Senate passage does not guarantee that the bill will become law. The House is scheduled to begin debate on patients' rights in mid-July. A similar measure passed the House in 1999 by a vote of 1275 to 151. Republicans will reportedly attempt to substitute a watered-down version of the bill, so as to avoid a Bush veto. Public opinion has not been swayed by Republican attempts to characterize the legislation likely to increase insurance costs and lead to a higher number of uninsured individuals. As reported in the Washington Post, two separate polls earlier this month showed 15-20% more public confidence in Democrats than in Bush or the Republicans on health care issues. If Bush does ultimately veto the bill, Democrats will undoubtedly use the issue in the 2002 congressional campaign.

In a speech to the American College of Cardiology Convention on March 21 Bush outlined his position on a patients' bill of rights. Before getting to patients' rights, however, the speech promoted a number of falsehoods. First it implied that the proposed 4% increase in discretionary spending would somehow make additional funds available for medical research. In fact, as we've discussed elsewhere in The Dubya Report, a 4% limit actually means a reduction in spending for many programs. Then Bush implied that he had supported a patients' rights bill in Texas. In fact, as Molly Ivins reported in a recent column, Bush vetoed the Texas bill the first time it was presented to him, and then refused to sign the right-to-sue provision the second time. The provision was enacted anyway because of the size of the majority by which it had been passed. During the 2000 election campaign, Bush nonetheless took credit for the bill, as did in the March 21 speech.

While advocating some provisions that made it into the bill passed by the Senate, Bush expressed opposition to "frivolous" lawsuits. "Our federal legislation must allow the review process to work, not short-circuit it by inviting unnecessary lawsuits. With strong independent review, doctors make medical decision, not the lawyers....Excess and frivolous litigation does harm to our health care system. It clogs the course and consumes time and money. It undermines the trust between doctor and patient. It drives up insurance premiums for everyone." Bush went on to list other provisions he would insist on, including caps on damages awarded in lawsuits against HMOs. An amendment to further limit damage awards was rejected by the Senate several days ago.

Bush's relationship to patients' rights has an interesting history. As reported by the Guardian UK last December, Bush was an investor in "a company that leased a chain of psychiatric hospitals where patients died and the conditions were so appalling that many were shut down."

During the time he was Governor of Texas, Bush was connected to the the company, Charter Behavioral Health Systems, through his association with billionaire investor Richard Rainwater. Rainwater invested in Charter Behavioral by way of a publicly traded real estate investment trust (REIT) that he founded, called Crescent Real Estate. In 1997 Mr. Rainwater paid $400 million from Crescent Real Estate for a 50% stake in Charter Behavioral. Because operating hospitals put the REIT's tax-exempt status at risk, Rainwater created Crescent Operating to run the hospitals, and Crescent Real Estate shareholders, including Mr. Bush received stock in Crescent Operating.

As insurers cut back on the length of time they would cover in-patient psychiatric treatment, Charter Behavioral, which operated approximately 80 hospitals, began to have financial problems. The Crescent deal added to these, requiring $40 million in annual rent to be paid to the REIT, and another $81 million in franchise fees to a different Rainwater-related company, Magellan Health. Charter Behavioral hospitals received tens of millions of dollars in Medicare and Medicaid funds.

Since 1998 Federal and state regulators had been uncovering problems at Charter facilities, and in 1999 the Justice Department and the Department of Health and Human Services began investigating Charter Behavioral for insurance fraud and patient abuse. The problems and violations included untrained staff, unsanitary conditions, improper use of restraints, record-keeping violations, and sexual abuse of teen-agers and children.

CBS News "60 Minutes" program reported on patient abuse and other problems on April 21, 1999. Including portions filmed with a hidden camera by and undercover investigator, the program documented the death of a 16-year old boy from asphyxiation after being "restrained" with a towel wrapped around his face. In another incident workers in riot gear "restrained" a screaming patient. A nurse is recorded filling out reports on patients apparently following instructions to emphasize negatives. The report does state that most Charter employees "try to do their jobs conscientiously" but many are underpaid and poorly trained. Patients are often handled without medical attention, and doctors when present "sometimes provide only cursory attention." The program also interviewed former employees who voiced the opinion that the company's chief purpose was to collect money from federal programs, which amounted to $300 million in 1998.

On February 17, 2000 Charter Behavioral declared bankruptcy, claiming it was necessary to "ensure continued services to patients." Crescent Operating proposed to buy the reorganized company, using a bank loan guaranteed by Richard Rainwater. Crescent Real Estate would then lease the remaining 30 Charter facilities to Crescent Operating for $20.3 million. Crescent Real Estate would also receive income from any sale of buildings once used by Charter. Charter, already being sued by laid-off workers for inadequate severance benefits, stated in a news release that it would be "unable to fully fund all benefits" to employees.

On August 19, 2000 Charter Behavioral paid the government $7 million to settler allegations of overcharging Medicare and other government programs. A Justice Department statement said, "Charter knowingly engaged in fraudulently billing federal health care programs for services and falsely documenting inpatient and outpatient psychiatric services that were not needed"

Bush's association with Rainwater began in 1989 when Bush approached him about investing in the Texas Rangers baseball team. Initially skeptical, Rainwater and associates eventually put up half of the $46 million price (but only after the intervention of then baseball commissioner Peter Ueberroth. Between 1991 and 1994 Bush earned about $270,000 from Rainwater-related investments. When Bush was elected Texas Governor he created a blind trust for his assets, in part to eliminate any appearance of conflict of interest concerning his Rainwater investments. This strategy was only partially successful. As Governor, Bush advocated privatizing state psychiatric hospitals, which would have directly benefited Magellan Health, of which Rainwater was the principal shareholder. The measure did not become law. In another questionable transaction, the state teacher retirement system also sold several buildings to Crescent Real Estate. Although Bush had no role in the sales, and the properties were independently appraised, he was an indirect beneficiary of the transaction. Bush sold the assets in his blind trust in 1998 when be began his quest for the Republican presidential nomination.


Dewar,Helen and Amy Goldstein "Senate Passes Patients' Rights Bill" Washington Post 30 Jun. 2001

Broder, David S. "For GOP, the Fight Becomes Riskier " Washington Post 30 Jun. 2001

Meier, Barry "Midas Touch Was Billionaire's Gift to Bush" NY Times30 Oct. 1999

"$7 Million Settlement In Medicare Fraud Case" National News Briefs. NY Times August 19, 2000, Saturday

Meier, Barry "A Chapter 11 Filing by Charter Behavioral" NY Times 17 Feb. 2000

Goodman, Walter "TELEVISION REVIEW; Restraint as a Euphemism In Psychiatric Hospitals" NY Times 21 Apr. 1999