HMO Cases

I recently responded to Kevin Drum’s charge that President Bush was being hypocritical in supporting a lawsuit to overturn the Texas Patients’ Bill of Rights after having taken credit for it in the 2000 campaign. Listening to the NPR discussion of the oral arguments on the way home, however, I came away with a different impression of what the case was about. NYT doesn’t yet have a recap, but this Detroit News summary from Saturday tracks with the NPR story:

Specifically, the Supreme Court is being asked to decide whether such cases can be heard in state court or federal court. In state courts, juries can award high amounts for punitive damages. In federal court, a patient can receive nothing more than the value of the benefit denied by the health maintenance organization.

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Both cases were filed in state court in 2000 under a 1997 Texas law allowing patients to sue HMOs. But the cases were transferred to federal court after the insurers said Calad and Davila should have contested the refusal of their claims under a 1974 federal law called the Employee Retirement Income Security Act. And ERISA does not allow patient lawsuits for monetary damages.

A federal appeals court in 2002 ruled that Calad and Davila could indeed sue for malpractice damages in state court. But the HMOs appealed to the Supreme Court.

David Carter, an Aetna spokesman, said that ERISA has its own procedures for reviewing or appealing coverage decisions, and that sidestepping the federal law would lead to more lawsuits, which would drive up health care costs.

ERISA has helped companies provide affordable quality health care coverage for their employees, he said.

“It provides employees a prompt, responsive way to address disputes while still receiving care. The court system is a poor and costly substitute,” Carter said.

While granting Kevin’s point that Bush opposed the granting the right to sue as a matter of policy–and then took credit for it, anyway when the bill passed–it doesn’t strike me as hypocritical for him to join with the insurers in defense of ERISA. Bush is filling a different role now. As president, it’s perfectly reasonable to take the position that federal precedent should prevail over conflicting state-level legislation in matters of interstate commerce.

FILED UNDER: Law and the Courts
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. Kevin Drum says:

    I agree that (as usual) this case is being argued on fairly arcane grounds not directly related to the right to sue. Still, the effect is the same: if the case has to be tried under ERISA, the ability to sue HMOs for monetary damages is essentially dead.

    Besides, I’m not sure that the flip-flop here is really as reasonable as you say. Is it really OK to claim to be in favor of state action when you’re a governor and then switch to being in favor of federal action when you become president?

  2. James Joyner says:

    I think so, yes. People changing jobs change institutional loyalties and argue for different prerogatives. It would be perfectly reasonable for, say, a California politician to support a medical marijuana law and then, in federal office, argue that federal narcotics statutes should govern.

    Now….if the politician is actually committed to the policy in question, they should then argue for a change in the federal law. So, Bush isn’t being hypocritical for supporting ERISA, but maybe he’s being hypocritical in not supporting either a statutory change in ERISA or passage of a federal Patients’ Bill of Rights that would nullify that part of ERISA.

    But, then, since Bush opposed that part of the Texas law to begin with. . .

    One’s head begins to spin.

  3. Dodd says:

    It’s more than OK – it is the Executive’s duty to defend federal laws from challenges (see, eg., 28 USC 31 § 514 et seq.). That’s why constitutional challenges always name the AG as the defendant.

    Congress makes laws, the Executive effectuates them. ERISA (parts of which I deal with in my law practice) is an exceptionally comprehensive New Deal-era law. As part of its comprehensive approach to the subject matter it addresses, it pre-empts state action is a wide number if areas (on grounds that, one suspects, Kevin would find agreeable absent a sliver of justification for accusing President Bush of hypocrisy). The instant case is just one of many such pre-emptions.