The Supreme Court’s June 21, 2004 decision in Aetna Health, Inc. v. Davila limited the ability of patients in employer-sponsored health plans to sue their HMOs.   Now, patients suing HMOs that refuse to pay for doctor-recommended care must bring suit in federal court and can only recover the cost of denied benefits. 

The Court’s decision essentially said patients’ state claims are superseded, or preempted, by the 1974 Employee Retirement Income Security Act (ERISA), which governs employer-sponsored health-insurance plans.  The Court ruled ERISA preempts the state patients’ bill of rights because ERISA was originally designed to “provide a uniform regulatory regime over employee benefits” and “[a]ny state-law cause of action that duplicates, supplements, or supplants ERISA’s . . . conflicts with clear congressional intent. . . , and is therefore pre-empted.”  Aetna Health Inc. v. Davila, 2004 U.S. LEXIS 4571, at 3 (U.S., 2004).

The patients sued the HMOs under the Texas patients’ health care bill of rights for failure to properly handle coverage decisions proximately causing injury.  The patients chose to file their claims under state law in attempt to recover lost wages and/or pain-and-suffering damages, which are not allowable under ERISA.  Thus, as a result of the Court’s ruling that the law was preempted, they were left with nothing. Had the claims been filed under ERISA the plaintiffs could have attempted to recover the value of the denied coverage. 

ERISA is based on trust laws and allows for equitable relief.  Thus far, equitable relief has not been defined by Congress or the Court.  In her concurring opinion, Justice Bader Ginsburg invited lawsuits to be filed under ERISA as a means to determine what constitutes equitable relief to allow for more recovery.  Her thoughts echo previous statements suggesting Congress should revisit and untangle the convoluted ERISA process. Id. at  37, citing (DiFelice v. AETNA U.S. health care, 346 F.3d 442, 453 (3rd Cir. 2003) (Becker, J., concurring)). 

In response to the Court’s ruling, and in an attempt to allow for damage recovery, Rep. John D. Dingell, D-Mich., and 81 cosponsors revived a bill that would allow patients to sue HMOs in state court for injuries resulting from coverage decisions.  Congressional Quarterly Today, 3-5 (June 22, 2004).  The Dingell bill would also direct “lawsuits that focused on whether a plan covered a specific service to go to federal court, where damages would be capped at $5 million.”  Id. at 5.  Advocates and HMO patients should watch this bill and other developments in response to the Davila decision.

Copyright © Center for Medicare Advocacy, Inc. 09/04/2013