From the July/August 1994 issue

IN A WIDELY PUBLICIZED TRIAL last May anxiously followed by therapists around the country, a jury in Napa County, California, awarded $475,000 to a father who had sued his daughter’s therapists, charging that by implanting false memories of sexual abuse in her mind they had destroyed his life. The case became the first in legal history in which a non-patient successfully sued somebody else’s therapist for anything other than suicide or wrongful death.

Gary Ramona, once a $500,000-a-year winery executive, had sued marriage, family and child counselor Marche Isabella and psychiatrist Richard Rose for $8 million for their treatment, in 1989 and 1990, of his then 19-year-old daughter, Holly, who was suffering from depression and bulimia. He claimed that Isabella had suggested to Holly a direct link between bulimia and childhood sexual abuse, and had interpreted the young woman’s fleeting and dubious images of sexual violation as memories of actual incest. To make matters worse, according to the father, Isabella and Rose, the chief psychiatrist of Western Medical Center in Anaheim, had inappropriately administered sodium amytal, a fast-acting barbiturate sometimes wrongly thought of as “truth serum,” in a way that falsely convinced Holly of the validity of the incest memories.

Lawyers for Rose and Isabella argued in response that they had only come to the aid of a confused and frightened young woman overwhelmed by spontaneous flashbacks of what appeared to be genuine abuse. Isabella, they conceded, had offered Holly’s mother the exaggerated statistic that 70 to 80 percent of bulimics had been sexually abused. But they argued that was hardly enough to implant memories. Sodium amytal, they contended, had been used only upon Holly’s insistence to explore her memories and possibly obtain information that might exonerate her father.

During the trial, Gary Ramona showed family videotapes depicting a close and loving family, and denied tearfully that he had ever sexually touched his daughter. His family life had been destroyed, he said, on March 15,1990, by an invitation to a therapy session in which his daughter, backed up by her mother and her therapist, had confronted him about sexually abusing Holly as a child. When Ramona vehemently denied the charges, his wife and daughter laid out what they considered to be corroboration reported childhood urinary infections; a recent gynecological exam showing a torn hymen; and the amytal interview. Later, Ramona discovered his wife had already filed for divorce. Afterward, Holly sued him. His two other daughters, along with Holly, refused to see him, and he lost his high-paid job as vice president of sales and marketing at the Robert Mondavi winery.

In 1991, Ramona filed a ground-breaking lawsuit, blaming what he considered bungled therapy for the loss of his family and his job. Napa County Superior Court Judge W. Scott Snowden allowed the case to proceed on the theory that, because he had been “summoned” to a family meeting, the therapists owed Ramona a legal “duty of care” even though he was not a patient. During the trial, defense attorneys argued that the family was already irretrievably damaged two weeks before the amytal interview: Holly had already told her mother of her accusations against her father, and her mother had already begun divorce proceedings. On the stand, Stephanie Ramona testified that through the years she had frequently thought of divorcing her husband. She also said she believed her daughter’s charges for a host of small reasons including Holly’s childhood vaginal pains and teenage fears of gynecological exams, a dislike of being touched by her father, and Gary’s eagerness to babysit the children when they were young. Once, Stephanie testified, she had come home to find her husband washing bedsheets while Holly wandered around the house in a sundress without underwear. She later found the little girl’s underpants in the dryer with the bedsheets. As for Gary’s charge that Holly’s memories had been suggested by her therapist, the defense noted, Isabella’s treatment notes indicate that for the first five months of therapy, sexual issues were barely discussed.

In January and February of 1990, according to Holly Ramona’s testimony, she was overwhelmed by images of her father’s hand rubbing her inner thigh and a flurry of white sheets; a struggle, her father grunting, the smell of his skin and aftershave, the weight of his body moving back and forth on top of her, pain in her vagina and rectum, and her own frightened face. Holly became increasingly bulimic, depressed and suicidal. She thought dial she might be crazy or making these images up and in late February, decided to tell her mother and her therapists about them.

Her mother wanted to confront the father immediately and seek a divorce, agreeing to delay any action only when Isabella said she first wanted Holly to be interviewed under the influence of sodium amytal, which Isabella believed could help establish truth. At the trial, however, it was established that while amytal loosens inhibitions and can lead people to disclose what they might otherwise withhold, it cannot confirm the literal truth of memories.

Holly Ramona was interviewed under sodium amytal on March 14,1990. At the trial, Rose and Isabella testified that Holly recalled very little that was new, and the interview was not videotaped or recorded. But Park Diets, a nationally known forensic psychiatrist hired by Gary Ramona, testified that “the magic of truth serum” had given Holly a false sense of certainty about what were probably “obsessional intrusions” and not memories.

In early May, after seven weeks of testimony and two days of deliberation, the jury, voting 10-2, found the therapists had negligently reinforced false memories. Gary Ramona claimed vindication. “I am grateful I have had the opportunity to show my family and the world that I never did any of the unspeakable things I have been falsely accused of,” he said. But the jury foreman, Thomas Dudum, said, “We were rather disturbed when Mr. Ramona captured the headlines by claiming a victory of sorts, when we knew the case did not prove he did not do it.” The jurors concluded that the memories had not been “implanted” Holly had apparently come up with them on her own but they had been “reinforced” when the therapists reassured Holly that they did not think she was lying. “We did not think that these therapists had given Holly a wonder drug and implanted these memories,” said Dudum. “It was a very uneasy decision, and there were a lot of unanswered questions.”

The case also left unanswered questions for other therapists about what, if any, precedent it may set. Isabella’s attorney, Jeffery Kurtock, contended it could open the door to lawsuits from any disgruntled relative of a therapy client. But it is more likely that the ruling, if upheld, will rest on more narrow grounds. In allowing the case to go forward, Judge Snowden had relied on a previous California case, in which a man was allowed to sue doctors and the Kaiser Permanente health maintenance organization because his wife had been wrongly diagnosed with syphilis and had been told to “go home and tell your husband” so that he could be tested, too. The order to tell the husband, the courts ruled, had created a legal “duty of care” an obligation not to act negligently toward him. In the Napa case, Judge Snowden said that the family meeting had created the same “duty of care” when he allowed the case to go forward.

For family therapists, such a ruling may indirectly acknowledge the importance of family systems thinking. But a rigid legal requirement that a therapist always has an equal legal obligation to all family members even those invited to attend only a single session could strike at the very heart of the practice of family therapy. What, for instance, will happen to the therapist who tries a few family therapy sessions and then decides that the husband’s violence threatens the safety of other family members? What of the therapist who organizes an unsuccessful “intervention” designed to force a family member into alcohol treatment? And what kind of legal exposure will a therapist face if he or she involves the wife of a regular client in a few sessions of couples therapy, and the marriage fails anyway?

There’s a lot of fear among our members,” says Michael Bowers, executive director of the American Association for Marriage and Family Therapy, who predicted that the Ramona case may play more and more of a role in clinical decision making. “If this decision is upheld and I were a lawyer advising a therapist, I would recommend that therapists consult with [other family members] over the phone, but never bring them into the room and especially never bring them in the room conjointly,” he said. “And that’s not what family therapists want.” Katy Butler


AS THE CONCLUSION OF THE great health care reform debate of 1994 fast approaches, the nation’s lawmakers soon will have to make the tough decisions they have been stewing over for months. Some of those decisions will affect the mental health system for decades to come. In fact, insurance coverage for mental health and substance abuse could well become a key area of contention as a reform bill gets patched together in the final days, or even hours, before Congress breaks in October for the 1994 election season.

The central issue in the current debate is whether mental health services should get the same coverage as other areas of health and medicine (referred to as “parity”) by their inclusion in a standard benefits package available to all Americans, or whether these services will continue to be subject to special limitations and restrictions. Despite a rising tide of sentiment that holds that treating mental health coverage differently perpetuates the stigma that surrounds mental illness, many lawmakers continue to believe that open-ended insurance coverage for psychotherapy, including family and marital therapy, would be too costly.

The battle in Congress over mental health coverage became serious in May and June. Two congressional subcommittees voted to expand the mental health benefit that was defined in President Clinton’s reform proposal and one other committee began debating a bill that also expands mental health coverage. The administration’s plan imposes a 30-day-per-year limit on psychiatric hospitalization and a 30-session-per-year limit on outpatient psychotherapy until the year 2001, when parity coverage would be phased in. The president’s plan also requires clients to pay 50 percent of the costs for outpatient therapy visits. Both the House Ways and Means Subcommittee on Health and the House Education and Labor Subcommittee on Labor-Management Relations removed the limits on outpatient therapy visits, expanded the amount of hospitalization covered, and required employers to pay 80 percent of the costs. Both bills also bar insurers and managed care plans from arbitrarily excluding any one discipline of mental health provider social workers or family therapists, for example from participation or qualification for reimbursement. And, most critical for family therapists, the bills include measures that require plans to cover so-called “collateral treatment,” so that family members of principal clients can be seen. Such visits will count toward a patient’s approved number of visits. At the same time, both committees also expanded the application of managed care to mental health and substance abuse.

Reform bills to be taken up in the Senate, by the Labor Committee and the pivotal Finance Committee, move in the same direction. They likewise remove limits on outpatient visits and require managed care oversight and review. By the time you read this, the four congressional committees tackling health care reform (a fifth, House Energy and Commerce, appears deadlocked) probably will have voted, either accepting or rejecting the revised mental health benefit. All but the Senate Finance Committee are dominated by liberal Democrats; these committees are expected to pass an expanded mental health benefit.

The Finance Committee, chaired by Sen. Daniel Patrick Moymhan (D-N.Y.), is the key committee to watch. Its 20 members are reflective of the Senate political makeup in general. If this committee approves a parity mental health benefit, such a measure would have a very high probability of inclusion in a final bill. Moynihan, now seen as the key arbiter of health reform compromise, is known to be sympathetic to a full-parity benefit, but is concerned about the economic effect of such a move. Indeed, the outcome in his committee will depend not on a vigorous debate about the wisdom of assuring that all Americans have access to unfettered mental health care, but on a calculation of cost. Specifically, the decision may rest on whether the Congressional Budget Office, which by law must crunch the numbers on all legislation, agrees with several recent studies showing that a full-parity, managed care benefit in mental health can be delivered cost-effectively in other words, at no more cost than coverage that has limits.

These studies helped persuade the members of the two House subcommittees that full-parity mental health benefits could be accomplished. And that’s why, in part, the committees proposed ending limits and endorsing managed mental health care. But the studies are far from definitive. Although two come from the respected actuarial research firm of Milliman and Robertson, they were funded by two groups that support managed care the American Managed Behavioral Healthcare Association, a group representing 14 mental health managed care companies, and the American Psychiatric Association.

The studies come to roughly the same conclusion: Full “non-discriminatory” coverage of all mental health and substance abuse care with no arbitrary limits, but subject to managed care, could be delivered to all Americans for between $185 and $224 per person annually. That includes the cost of caring for the severely mentally ill, who account for about $25 billion of the $100 billion annual tab for all mental health and substance abuse care. A third study, by the American Academy of Actuaries, projected the cost for a full-parity benefit at $240 to #305 a year per person. The administration’s estimate of its benefit, with limits on visits and hospital stays and a higher co-payment, is $241 to $259 per person annually. “These numbers show us that we can get a comprehensive set of benefits for the same costs or even less than plans that have limits and restrictions,” says Sen. Paul Wellstone (D-Minn.), a member of the Senate Labor Committee, chaired by Sen. Edward M. Kennedy (D-Mass.). “I will take these numbers into committee and argue that we can no longer justify discriminating against the mentally ill.”

The problem with estimating costs is that no one can predict the behavior of the currently uncovered population. Right now, only 50 to 60 percent of nonelderly persons have any mental health coverage. Once the other 40 to 50 percent of the population gains access to coverage, will costs skyrocket? Most mental health experts think not, but lawmakers are still worried. “I am very concerned about paying for all this and detailing these benefits up front,” says Sen. Judd Gregg (R-N.H.), who also sits on the Kennedy Committee. Gregg objects to language in Kennedy’s bill, which says that mental health services would be covered for persons “at significant risk of experiencing functional impairment in family, work, school or community activities.” “That would mean most of us in this room would be covered now if we wanted to seek help,” he quipped during the committee’s hearings. “It’s too broad.”

Gregg lost a fight to gut that portion of the bill, but he and other Republicans could wage the same battle when a reform bill gets to the floor of the Senate. It is important to note that the Kennedy committee overwhelmingly approved an amendment that would force Congress to cut benefits or raise taxes if the cost of the overall benefit package exceeds projections after reform is fully implemented. Such a provision is very likely to be in any final bill and would have a significant effect on mental health providers. It means that even if mental health coverage is greatly expanded now, for many years to come it will be vulnerable to being scaled back if costs are not contained first the carrot, then later perhaps the stick.

Adding to the turmoil in the debate over mental health coverage has been fractious infighting among some mental health lobbying groups. Virtually all the professional societies, including the American Association for Marriage and Family Therapy, favor the inclusion of a mental health parity benefit in a standard benefits package. But some groups are at each other’s throats over the issue of managed care. The American Psychological Association, in particular, has lobbied Congress intensively to impose protections against managed care. The group wants any reform law to contain measures that give therapists a greater voice in determining what course of treatment a client needs. “We are all in favor of controlling costs, but doing so by allowing managed care firms to call the shots on how someone is treated is not the way to do it,” argues Bryant Welch, senior policy advisor for the American Psychological Association.

The American Psychiatric Association, meanwhile, has been pushing for managed care in the belief that it’s the only way to get a full-parity benefit. “We have the best chance ever of ending years of discrimination against mental health, but only if we understand that providers are going to be held accountable for the care they deliver and its cost,” says Mary Jane England, the Association’s president elect. Welch says England’s election caps the psychiatrists’ “sell-out” to managed care: England, a trained psychiatrist, is also the president of the Washington Business Group on Health, a lobbying group representing the health care interests of 80 large companies that has long been an advocate of managed care. England freely acknowledges her bias and hopes to bridge the gap with psychologists and social workers. “We will have to work together if managed mental health care is going to work for clients,” England says. Congress faces a long, hot summer forging a health reform compromise. That debate may also offer the closest thing yet to a national referendum over just how important guaranteed access to mental health services is to the nation’s well-being. Steve Findlay


KAREN SHORE  is feeling hopeful today. The group she heads, the Coalition of Mental Health Care Workers and Consumers, finally got someone’s ear in Minnesota Senator Paul Wellstone’s office this week. Plus, she’s made inroads on hammering out a few managed care regulations in the New York State legislature. Best of all, Time and Business Week recently interviewed her to talk about the ethical question at the heart of managed care: Is there a conflict of interest inherent in the insurance industry’s role in treatment decisions? But this is a good week. Lately, most weeks have been more daunting.

“It’s like being in Vichy, France, during the occupation,” says Shore. “Except Hitler is managed care, and everybody is quietly bowing their heads arid joining, against their best intentions. The people who say managed care is here to stay are being just as complacent as people were about the Nazis.” As farfetched as it may sound, the Hitler analogy expresses the militancy that it takes for a small grass roots group of mental health workers to fight the burgeoning Goliath of managed care.

Managed care companies now provide mental health benefits to about 80 million clients. Shore’s Coalition, on the other hand, is a small, interdisciplinary collection of social workers, psychiatrists, psychologists and a few consumers spread across the country that numbers less than a thousand. Based in upper New York State, the Coalition is the most organized of several therapist groups forming around the country to oppose a managed care system that they believe is inherently greedy and exploitive, principally designed to enrich corporate interest at the expense of therapists and their clients.

As Congress debates health care reform, these groups, which include the 600-member Consortium for Psychotherapy in Boston, and the 1,000-member Campaign for Better Health Care Alliance in Chicago (a consumer group), have begun to affiliate and share information. To make their case, they point to the experience of clients like Susie, a grade-schooler who became mute and suicidal after an auto accident that killed her father and brother. Her HMO limited Susie to 10 therapy sessions, even though by the ninth session Susie had made another suicide attempt and was still mute. It took 12 more months of out-of-pocket therapy for Susie to speak again. Then there is the story of Dave, who, soon after filing a claim for therapy with the managed care office of his self-insured employer, was turned down for an expected promotion. He later learned that his former employer’s insurance office had turned his therapist’s report into office gossip; the information had cost him not only a promotion, but had made its way to his new employer. Shore says the list of vignettes, some of which are collected from lawsuits, grows steadily and is part of the whole information packet that goes out to members, legislators, company benefits departments and newspapers explaining the Coalition’s work.

In an effort to protect clients like Susie and Dave, as well as therapists who refuse to accommodate to the juggernaut of managed care, the Coalition has come up with 12 proposed regulations to correct what it believes are the worst excesses of the new health care system. These regulations would ensure the confidentiality of clients (to protect people like Dave) as well as “any willing provider” provisions, so that any therapist could join a given managed care company. The Coalition also is concerned that most managed care companies rely on their own therapists to decide whether a patient will be allowed additional treatment during a review. The group has been fighting in the New York State legislature to enact an “independent review” regulation that would give patients recourse outside of the managed care company if they feel additional treatment is necessary but their insurance company has turned them down.

To prevent blacklisting, the Coalition also is trying to keep providers from being ejected from networks (except for incompetence) and to require managed care companies to print lists of their network providers (so that insurance companies cannot steer patients to favored providers). They also want to see a requirement put into effect that limits the differential in reimbursements between network and non-network providers to 15 percent because some companies offer so little in benefits for outside providers that people effectively are left with little or no insurance coverage. To prevent brief therapy being automatically prescribed in every case, the Coalition believes that managed care decision makers should have to follow standard-and-usual treatment for mental disorders. To avoid utilization reviews that both increase insurance costs and infringe on providers’ autonomy, the Coalition proposes that such reviews not be done until the twentieth session. In fact, this regulation has already passed in some states because insurance companies have recognized that it isn’t cost effective to do a review sooner.

All of these proposed regulations are an attempt to put some checks and balances on an industry that claims it is trying to cut health care costs, but at the same time pays some of its CEOs between 10 and 15 million dollars a year. Coalition members are philosophically opposed to managed care, but as long as it is here, they are trying to ensure that money is being spent on health care itself, not on administrative costs and inflated salaries. Activists point out that a utilization review costs $800, while an entire course of therapy might not cost that much.

Managed care companies are up in arms about these attempts to regulate them. They are pulling out their own, well-funded studies that show that only 10 percent of premiums are going to administrative costs. In publications like Business Insurance Weekly, managed care companies have taken Shore and her colleagues to task, charging that they have only patients’ anecdotes to back up their complaints. Their own surveys show that most patients are quite satisfied with managed care, and they warn that many of their critics’ proposals would lead to additional costs for the community at large, and more bureaucratic government involvement.

Even some friendlier critics think the Coalition is taking the wrong tack. Michael Bowers, executive director of the American Association for Marriage and Family Therapy (AAMFT) says of the Coalition, “They are using a political approach to a market-driven phenomenon, and activist groups are pretty ineffectual against that. Groups much more powerful than they are, such as the American Psychological Association (APA), fought the same sort of battle but then lost.” Bowers sighs, “The only people that have power anymore are the insurance industry and the courts.”

Shore replies that professional organizations have been straitjacketed into a conservative role. Although they have fought to educate their membership, she says groups like the APA have lost because “they are much more beholden to the managed care companies than a group like ours, that cuts across different professional lines. If psychologists speak out against managed care, then the companies will start hiring social workers.

“It’s hard to know the best tack to take against managed care,” admits psychiatrist Peter Kramer, author of Listening to Prozac. “It’s very hard to fight managed care without seeming self-serving.” While he believes that managed care will have a limited life because consumers will become increasingly dissatisfied, he’s concerned that, over the next few years, psychiatry will be reduced to a profession of medication dispensers.

Some opponents believe that the biggest obstacle to this hegemony of managed care will come when the collective rage of millions of baby boomers weaned on psychotherapy is translated into a ground swell of consumer litigation, once they no longer get mental health care beyond crisis intervention or, worse, are damaged by inadequate therapy. But the AAMFT’s Michael Bowers says that in order tor lawsuits to really affect the managed care industry, mental health workers will need to offer good data about therapy outcome and its connection to definable practice standards. “One vignette that turns into a lawsuit will just affect one company,” he points out. “But a precedent-setting case, where it can be proven that, say, restricting access to care has affected quality… that will affect the industry.”

Bowers may be right the Coalition maybe making some tactical mistakes. But it also seems clear that the managed care industry needs vocal critics. So the Coalition and other activist groups will continue to fight against odds that sometimes seem insurmountable. No matter what happens with health care reform in the coming months, they are determined that they will be heard. Says Boston therapist Ray Mont of the Consortium for Psychotherapy, “We may be small, and just starting out, but as long as there is managed care, we’ll be yelling and screaming and kicking up a fuss.” Kathryn Olney

Psychotherapy Networker

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