The National Pulse

Erisa Again

High Court Takes Another Look at Pre-Emption in HMO Disput

Posted Feb 2, 2004 7:54 AM CDT
By David G. Savage

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The Patients Bill of Rights may have stalled in Congress, but its key provision--a pa­tient’s right to sue a health care plan--is alive again in the U.S. Supreme Court. The justices have agreed to hear a Texas case that could decide the legal rights of 130 million Americans who receive medical care as a benefit provided by an employer or union. The case asks whether these health care plans may be sued for damages in state court if they provide substandard medical care.

The justices “have danced all around this issue, and this case presents it pretty squarely,” says George Parker Young, a plaintiffs lawyer from Fort Worth.

He represents two patients who have been fighting for the right to sue their medical plan in the Texas state courts. One of them, Ruby Calad, underwent a hysterectomy but was ordered to leave the hospital after one day.

Though her doctor was opposed, Cigna Health Care of Texas, the HMO used by her husband’s employer, insisted on the speedy discharge. Calad suffered complications and was rushed back to the emergency room a few days later. Juan Davila, a diabetes patient, says he nearly died of internal bleeding after his Aetna HMO refused to pay for the Vioxx his doctor prescribed. Instead, it insisted he try a cheaper pain reliever, which caused the internal bleeding.

The cases, Cigna Healthcare of Texas Inc. v. Calad, No. 03-83, and Aetna Health Inc. v. Davila, No. 02-1845, have been consolidated and will be argued next month.

Pre-Emption Contention

Lawyers for Cigna and Aetna sought to have the suits dismissed because, they argued, the federal Employ­­ee Retirement Income Security Act, which governs employee benefits, pre-empts all such claims.

But in something of a surprise, the 5th U.S. Circuit Court of Appeals in New Orleans two years ago refused and sent the cases back to the state courts. Roark v. Hu­mana Inc., 307 F.3d 298. The 2nd U.S. Circuit Court in New York City handed down a similar ruling last year that allowed a widow to sue her husband’s health care plan for refusing to pay for a blood transfusion that might have saved his life. Cicio v. Does, 321 F.3d 83.

The rulings set off alarms among major employers and the insurance industry. They had thought until recently that ERISA had erected a barrier to such lawsuits.

“It’s a little discouraging to see these courts veering off course,” says Stephanie Kanwit, counsel for the American Association of Health Plans. “This will do nothing but drive up health care costs even higher,” adds Stephen Bo­kat, general counsel for the U.S. Chamber of Commerce. Both groups joined amicus briefs.

The case renews that perennial quandary: What does ERISA mean? In the 1980s, the justices interpreted the federal law broadly as pre-empting virtually all state court claims against an employer-sponsored benefit plan.

However, as employers quit buying insurance policies and instead enrolled their work­ers in managed care plans, patients learned ERISA largely barred them from suing HMOs. In recent years, though, the justices have backed away a bit from the view that ERISA always pre-empts state claims against HMOs. Two years ago, the court said HMOs can be forced to comply with a state law that gives patients a right to an independent review by outside doctors when a dispute arises over a medical treatment or a drug benefit. Rush Prudential HMO v. Moran, 536 U.S. 355.

Employers said this state mandate will force them in some instances to provide more costly benefits. But in Rush, the court said this law was more akin to regulation of insurance, long a domain of the states. Still, the ruling came on a 5-4 vote, and the line between an employee benefit and health insurance remains elusive. The court now has the chance to brighten that line.

David G. Savage covers the U.S. Supreme Court for the Los Angeles Times and writes regularly for the ABA Journal.

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