U.S. High Court Blocks State Court HMO Suits, SupportERISA Preemption Two justices say Congress shouldrevisit ERISA, give plan members a better reliefmechanism

The U.S. Supreme Court gave health care companies a victory lastweek with a ruling that patients cannot sue in state courts whentheir health maintenance organizations refuse to pay fordoctor-recommended medical care.

The decision involved Aetna Health Inc. vs. Davila andCigna Healthcare Inc. vs. Calad. Both cases were broughtunder the Texas Health Care Liability Act, which allows members ofemployer-sponsored plans to sue carriers over benefitsdetermination decisions that involve questions of medicaljudgment.

Claims of malpractice by a doctor are not affected by the 9-0decision.

In one of the cases at issue, a patient sued Aetna for refusingto pay for a pain-relieving drug for arthritis. The other involveda woman who claimed she suffered complications after surgery whenCIGNA did not let her stay long enough in the hospital to make aproper recovery.

In addition to Texas, at least nine other states have similarlaws that permit legal action against HMOs. Advocates of the statelaws have contended that the states have a right under the 1974Employee Retirement Income Security Act and the McCarran-FergusonAct to regulate benefit plan disputes that involve the “business ofinsurance.”

The health plans themselves have argued that the state lawsviolate ERISA, which preempts state laws and regulations governingbenefit plans. The original authors of ERISA argued that preemptingstate-level interference with employee benefits would helpemployees by increasing the uniformity and lowering the cost ofbenefits.

“Allowing respondents to proceed with their state suits wouldpose an obstacle to the purposes and objectives of Congress,'”Justice Clarence Thomas wrote in the opinion for the court, quotingfrom a 1987 court decision, Pilot Life Insurance Company vs.Dedeaux.

Federal courts govern benefit determinations even if thedecisions involve a mix of medical judgment and eligibilityconsiderations, Justice Thomas wrote.

Justice Ruth Bader Ginsburg, in a separate opinion for herselfand Justice Stephen Breyer, wrote that ERISA does preempt statelaws allowing consumers to sue health plans, but that Congressought to revisit ERISA and give health plan members a bettermechanism for getting relief from wrongdoing.

Aetna, CIGNA and groups representing insurers and employers arewelcoming the decision.

“By affirming the role of ERISA in employee benefits, the courthas helped to assure that millions of working Americans willcontinue to have access to quality health coverage provided bytheir employers,” Aetna said in a statement.

CIGNA noted in its statement that it has developed an effectiveappeals process to handle member grievances since states begantrying to expose health plans to state court tort suits.

“We view this process which, when necessary, involves the use ofindependent external reviews whose decisions are binding on CIGNAHealthCare as a fair, efficient and equitable mechanism forconsumers to resolve coverage issues,” CIGNA said.

A copy of the opinion is on the Web at http://a257.g.akamaitech.net/7/257/2422/21june20041210/www.supremecourtus.gov/opinions/03pdf/02-1845.pdf.

Allison Bell is an assistant editor for NU's Life &Health Edition.

Reproduced from National Underwriter Edition, June 25, 2004.Copyright 2004 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.