Human Capital & Careers

HMOs Win Supreme Court Case

Justices rule that ERISA pre-empts lawsuits brought under state law.
Stephen TaubJune 22, 2004

The Supreme Court ruled Monday that employees cannot sue their health maintenance organizations for malpractice damages under state law if the plans won’t pay for doctor-recommended medical care.

In a unanimous decision, the justices wrote that a 1974 federal law, the Employee Retirement Income Security Act, pre-empted such lawsuits brought in state court, according to Reuters. The Supreme Court overturned a U.S. Court of Appeals ruling that allowed two lawsuits to proceed under a Texas law that allows patients to seek damages from their HMOs.

The decision is a huge win for insurers, who have argued that patients should be able to sue only in federal court, and then only to recover the value of whatever benefit the HMO denied. Juries in state courts, noted the Associated Press, generally are generous to sympathetic victims.

In one of the two lawsuits that were under consideration, a hysterectomy patient claimed that Cigna Healthcare of Texas would not pay for a longer stay in the hospital, even though her doctor recommended it. Several days later she returned to the hospital suffering complications she claims could have been avoided had she remained hospitalized longer after surgery, according to the Associated Press.

Another patient, covered by an Aetna HMO, claimed that his primary-care physician prescribed the painkiller Vioxx for his arthritis, but that Aetna required him to try two less-expensive drugs first, according to Reuters. After three weeks on the cheaper drug, the individual was rushed to the emergency room suffering from bleeding ulcers.

According to Reuters, the Supreme Court ruling weakens the Texas patient protection law and those of nine other states: Arizona, California, Georgia, Louisiana, Maine, New Jersey, Oklahoma, Washington, and West Virginia.

Critics said the ruling reinforces the need for national patient-rights legislation.