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When Nancy Miller's husband was diagnosed in the fall of 1994 with a rare and deadly disease, she thought the illness would be her husband's only enemy.

She never imagined her insurance company would be a problem, too.

"You have a very false sense of security with health insurance," the Cheektowaga resident said. "People feel, if you've always had coverage, you think insurance is the least of your problems. You're dealing with emotional problems and how to get the best treatment. The last thing you think is whether you're going to be covered or not."

Today, Thomas Miller is dead. And besides leaving behind three children and his wife of 25 years, Thomas Miller's death has left lingering questions that haunt his family.

Would he still be alive if his insurer, Independent Health, had not for two years rejected the advice of four physicians and paid for the expensive treatment they recommended?

"HMOs are good at daily medical problems," Nancy Miller said. "But when you get into life-threatening illnesses, it's a different situation."

The rejections and procedures the Millers went through with their HMO is now being held up by critics at the Capitol as an example of what's wrong with health insurers across the state. Legislation pending in Albany would make HMOs and other insurers legally liable for decisions they make that harm their members. Presently, only Texas has placed such legal obligations on insurers.

The "HMO liability bill," as it's known, is a battle between some of the deepest-pocketed political titans in the state.

On one side are trial lawyers and physicians -- two groups that rarely agree on anything in Albany. On the other side are insurers and some business organizations.

The measure has already passed the Assembly and has the backing of several key Senate Republicans. Whether it passes in the coming weeks is, all sides nervously admit, unknown.

Thomas Miller appeared healthy in the summer of 1994. He was a coach of youth baseball and basketball teams at his Cheektowaga parish.

In September of that year, however, he was diagnosed with a disease called AL amyloidosis, which over time shuts down the functions of organs. His physicians recommended he receive a bone marrow transplant procedure.

Independent Health, however, turned down the request to pay for the treatment, despite the recommendations over the next year-and-a-half from four physicians, including one the HMO had suggested Miller see.

At first, Independent Health considered the treatment "investigational" and would not pay for what was estimated to cost $150,000 or more.

Miller, a sales manager for a Niagara Falls dairy cooperative, began chemotherapy in the meantime, which the HMO did pay for. But his condition worsened.

Without the funds to pay for the recommended treatment -- which was to have been at Roswell Park Cancer Institute or at a Boston specialty clinic -- the Millers turned to Richard Valentine, a Buffalo lawyer. Valentine eventually got Independent Health to agree to pay, according to letters provided by the lawyer. But, according to Valentine and Miller's wife, it was too late.

By the time Thomas Miller got to a Boston clinic for treatment, his kidneys were already failing. Last January, within a few months of getting his treatment covered, Miller was dead at age 47.

"When someone you love is diagnosed with any kind of serious illness . . . you place your trust in the doctors," said Nancy Miller. "But then you realize his life wasn't in the hands of doctors, that it was the insurance company to decide what kind of treatment he was to receive or not receive."

In particular, she blamed the HMO's in-house grievance procedure, which she said took too long each time to decide her husband's coverage.

Independent Health declined to comment on the Miller's case. But Dr. Michael Cropp, the HMO's medical director, said the insurer is bound to only approve treatment methods that are safe and effective.

"It's almost a sacred compact with our members," he said.

Besides, he said, if the HMO approves coverage for a procedure for a treatment that isn't safe and effective, "that puts us in a very vulnerable position."

Why wouldn't the insurer cover something recommended by four physicians?

If the doctors "come back with literature to support that this is safe and effective, then we have a responsibility to make a decision," Cropp responded. "But we do have a burden of proof. It's not just the physician saying that it should be done."

Cropp also noted that the HMO never says patients can't have certain, expensive treatments, only that the HMO doesn't have to pay for it if the procedures don't fall under the plan's coverage.

Since many experimental treatments go on to become conventional methods -- and therefore can be lucrative to companies involved in the early stages -- others besides insurers should be responsible for paying for such treatments, he said.

Supporters of the HMO liability bill say the legislation will improve care for seriously ill people.

Health maintenance organizations and other insurers "are primarily focused with not spending money on somebody's health care. And when they wrongly deny care and somebody gets hurt, these companies know that they are above the law and cannot be held accountable," said Assemblyman Richard Gottfried, a Manhattan Democrat who heads the Assembly Health Committee and is the author of the HMO liability bill.

Without the legislation, Gottfried said, patients will continue to have no basis to sue since courts have agreed that an insurers' liability does not generally include refusing coverage. The point of the bill is not to get damage awards for patients, he insisted, "but to make HMOs and insurance companies base their decisions on legitimate professional criteria to avoid being sued."

HMOs criticize the measure, saying trial lawyers looking to increase their own revenues are driving the legislation. The HMOs also say that such liability will sharply boost insurance costs.

Gottfried dismisses both arguments.

"This would only increase premiums if HMOs today are making a lot of money wrongly denying care. If that's how they're making money, then they ought to be hit," he said.

"They spend millions in advertising telling us how much they want us to get the best care. This would hold them to that promise," Gottfried added.

But the state HMO Conference, a lobbying group that represents 25 HMOs, says premiums could rise by 5 percent if the bill goes through.

"It would increase the practice of defensive medicine," said the group's spokeswoman, Leslie Moran. By that, she said, insurers would be forced to start covering possibly unnecessary services just to protect themselves from liability.

Consumers can now take their coverage complaints to the state Insurance Department for resolution, she said. But she acknowledged, the agency does not often order HMOs to cover denied treatments.

She added that a new law designed to make managed-care plans fairer to consumers was just passed last year and that measure needs time to kick in before enacting more legislation.

But physicians -- who can have one-quarter or more of their business through a particular HMO -- say they are finding themselves increasingly caught in the middle between trying to recommend the best medical care and not risking the relationship with their HMO.

"The reality there is tremendous pressure to give less care," said Gerard Conway, the chief lobbyist for a statewide association of physicians.

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