Federal trumps state law in HMO disputes.
Health maintenance organizations breathed a sigh of relief on June 21, 2004, when the U.S. Supreme Court unanimously issued a decision in the consolidated cases of Aetna Health Inc. vs. Juan Davila and Cigna Healthcare of Texas Inc. and Cigna Corp. vs. Ruby R. Calad that the Employee Retirement Income Security Act The Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C.A. § 1001 et seq. (1974), is a federal law that sets minimum standards for most voluntarily established Pension and health plans in private industry to provide protection for individuals enrolled in these plans. pre-empts the Texas Health Care Liability Act. The court rejected the plaintiffs' right to sue their health plans for denied benefits, and thus essentially blocked managed-care liability provisions contained in patients' rights The legal interests of persons who submit to medical treatment.
For many years, common medical practice meant that physicians made decisions for their patients. This paternalistic view has gradually been supplanted by one promoting patient autonomy, whereby patients and laws already enacted by 10 states.
"This was a significant decision for HMOs because it precludes the state law damages claims," said Robert Eccles, an attorney with O'Melveny & Myers LLP LLP - Lower Layer Protocol in Washington, D.C., who represented Cigna in the Calad case. "Health plans are relieved that they're not going to get slammed with large damage awards; but on the other hand, the world has already changed to regulate the process in a way that didn't exist five years ago."
Staving off large state-court damage awards can potentially save participants coverage costs and help health plans increase profits. The Congressional Budget Office The Congressional Budget Office (CBO) is responsible for economic forecasting and fiscal policy analysis, scorekeeeping, cost projections, and an Annual Report on the Federal Budget. The office also underdakes special budget-related studies at the request of Congress. reported that letting patients sue their health plans would increase health insurance premiums by an average of about $100 per person per year.
The two cases were brought independently in Texas state court by plaintiffs Juan Davila and Ruby Calad, who flied malpractice claims against Cigna and Aetna under the state liability act--a patients' rights law enacted in 1997. Davila, a post-polio patient with diabetes and arthritis, said Aetna refused to cover a prescription for Vioxx without first trying a less expensive alternative. After three weeks on the generic, Davila suffered bleeding ulcers, a near heart attack and spent several days in critical care.
For Calad, the suit against Cigna Healthcare of Texas came about because she was sent home against her doctor's orders "Doctor's Orders" is the title of an episode from the third season of the television series . Its episode number is 068, and it first aired on 18 February 2004. Plot summary
This is a summary of the beginning portion of the episode. the day after a complicated hysterectomy hysterectomy (hĭstərĕk`təmē), surgical removal of the uterus. A hysterectomy may involve removal of the uterus only or additional removal of the cervix (base of the uterus), fallopian tubes (salpingectomy), and ovaries . A Cigna discharge nurse said Calad didn't meet the plan's criteria for a longer hospital stay so Cigna wouldn't pay for additional inpatient treatment. After her discharge, however, she had to return to the hospital for additional treatment.
Cigna and Aetna had both cases moved from state to federal court on the grounds that the federal ERISA See Employee Retirement Income Security Act.
See Employee Retirement Income Security Act (ERISA). preempts any claims regarding employee benefit plans. Under ERISA, patients can sue an HMO HMO health maintenance organization.
A corporation that is financed by insurance premiums and has member physicians and professional staff who provide curative and preventive medicine within certain financial, or other health plan for reimbursement of denied benefits but not for damages caused by the denial. On that basis, the federal district court dismissed both claims. The plaintiffs appealed, arguing that their HMOs' treatment denials represented negligent medical decisions and belonged in the state court. The U.S. Supreme Court, however, unanimously ruled that ERISA completely pre-empts the plaintiffs' state law claims, and the high court judges noted that under ERISA if an HMO concludes that a particular treatment isn't covered under the terms of the plan, its "denial of coverage would not be a proximate cause An act from which an injury results as a natural, direct, uninterrupted consequence and without which the injury would not have occurred.
Proximate cause is the primary cause of an injury. of any injuries arising from the denial."
Stephanie Kanwit, special counsel for America's Health Insurance Plans, said the Supreme Court's opinion maintains the status quo [Latin, The existing state of things at any given date.] Status quo ante bellum means the state of things before the war. The status quo to be preserved by a preliminary injunction is the last actual, peaceable, uncontested status which preceded the pending controversy. by indicating that ERISA prescribes uniform procedures that must be obeyed nationally and states can't decide to impose additional remedies. "It also confirms what we've been saying in the health plan community for years--external review works very well," she said.
The cases also minimize risks to insurers by cutting out the ERISA-based plans from the statutes, according to Austin-based attorney Lannis Temple.
Michael Bidart, an attorney with Shernoff Bidart & Darras LLE LLE Left lower extremity expects minimal impact, saying the ruling simply reaffirms a 1997 U.S. Supreme Court decision, Pilot Life vs. Dedeaux. The decision in that case established that whenever a beneficiary obtains group health coverage through an employer, benefits disputes are preempted by ERISA. "Since that decision, there's been a tremendous outcry by HMO consumers and many federal court judges having to do with perceived inequity, of having a situation where private sector employees who obtain their health insurance through a group insurance setting have dramatically less legal rights than public sector or church employees who aren't ERISA pre-empted," Bidart said.