Patients’ Right to Sue Loses Steam

Published September 1, 2004

The U.S. Supreme Court’s late-June decision rejecting an employee’s right to sue a health plan under a state statute and reaffirming the primacy of federal law in the matter, returned to Congress an issue that had caused a serious political clash over the past few years.

At issue before the Court was whether a Texas statute, and similar legislation in nine other states, could give the states’ residents the right to sue their managed care plans for punitive damages when the plans refused to cover treatment a physician claims is medically necessary for a covered condition. Those statutes were in direct conflict with a federal law, the Employee Retirement Income Security Act (ERISA). ERISA supersedes state law and exempts self-funded managed-care plans from state regulations.

Texas and the other states (Arizona, California, Georgia, Louisiana, Maine, New Jersey, Oklahoma, Washington, and West Virginia) challenged this aspect of ERISA, arguing against the ERISA exemption.

Last year’s congressional debate over proposals to modernize Medicare had shoved to the sidelines the highly charged “patients’ rights” debate in which supporters–led by Representative Charles Norwood (R-Georgia), former Representative Greg Ganske (R-Iowa), and congressional Democrats and allies among medical and consumer groups–had battled with Republicans, the insurance industry, managed care plans, and business interests for the past several years. The two sides had engaged in a long war of dueling press releases, cost studies, and lobbying visits.

In the end, the proposal was tabled and the bill died without coming to a vote. Dissatisfied with the pace of events in Congress, patients’ rights supporters turned during recent years to state legislatures and the federal courts in hope of swifter action.

Forceful Ruling

The Court combined two Texas cases–Aetna Health Inc. v. Davila, U.S., No. 02-1845, and Cigna HealthCare of Texas Inc. v. Calad, U.S., No. 03-83. Its decision, written by Justice Clarence Thomas, was a forceful and unanimous 9-0.

The Thomas opinion slammed shut the door that had been opened by lower federal courts in permitting individuals to sue, which had caused the case to proceed to the Supreme Court.

Thomas wrote states lacked any room to maneuver within ERISA. Specifically, he said state law that “duplicates, supplements, or supplants” federal law “conflicts with the clear congressional intent to make the ERISA remedy exclusive.”

The plaintiffs, wrote Thomas, “complain only about the denials of coverage promised under the terms of ERISA-regulated employee benefits plans [emphasis added]. Upon denials of benefits [they] could have paid for the treatment themselves and then sought reimbursement through [ERISA], or sought a preliminary injunction.” ERISA, he continued, “must be interpreted in light of the congressional intent to create an exclusive federal remedy in ERISA.”

Consumers Moving On

Due to the lack of time and other pressing legislative issues, congressional action has moved on to other health care interests. A July 2000 Washington Post/Kaiser Family Foundation/Harvard University poll had found 15 percent of U.S. registered voters polled called “protecting patients’ rights” in health plans the most important issue in their votes for president.

By contrast, a Kaiser Family Foundation study in February 2004 found only 6 percent of Americans identified “insurance company concerns” as their top health care issue. The most important health care issue now, according to the February Kaiser poll, is health care costs, identified as such by 44 percent of respondents.

President Changed Position

Four years ago, George W. Bush, then governor of Texas, promised in debates and campaign speeches a patients’ bill of rights similar to what passed in Texas and was struck down in June. During a presidential debate with Democratic candidate Al Gore, the governor declared, “If I’m elected president … people will be able to take their HMO to court. That’s what I’ve done in Texas.”

At oral argument last March, however, the Office of the Solicitor General, presenting to the Supreme Court the administration’s positions on the case, said allowing plaintiffs to sue for wrongful denial of medical benefits would undermine ERISA by allowing state laws to override an existing federal law.


Tom Bruderle ([email protected]) is vice president of congressional affairs for the National Association of Health Underwriters (NAHU).


For more information …

The U.S. Supreme Court’s June 21 decision in Aetna Health Inc. v. Davila is available through PolicyBot. Point your Web browser to http://www.heartland.org, click on the PolicyBot button, and search for document #15498.