Health Administration Responsibility Project
Preemption of state tort claims
12/24/98 - The decision in Pappas,
though from a state supreme court, may presage a liberalization
of preemption of state negligence claims.
6/19/00 - The Pappas decision was vacated by the
US Supreme Court, and remanded for new hearing in light of
Pegram v. Herdrich, the decision which
essentially destroyed the fiduciary duty of plans towards members!
BIGGER FLASH YET
4/3/01 - The PA Supreme Court reaffirmed it's original decision on remand!
(This is like a slow-motion tennis match! ) But only a few days before, the 3d Circuit
(where PA is) reached the opposite conclusion in the very similar case of
Pryzbowski v. U.S. Healthcare
- "[ERISA] supersede[s] any and all state laws insofar as
they may now or hereafter RELATE TO any employee benefit
plan described in [ 4(a) of ERISA ] and not exempt under
29 USC 1003(b)
- Preemption is Waived if not raised as affirmative defense
- General Tort Laws are preempted, even for an Insured Plan
Pilot Life v. Dedeaux, 481 US 44 (1987)
- HOWEVER see Sharon Arkin's very persuasive
argument for liability of insured plans.
- ERISA provides no relief, and preempts any state relief for
damages due to improper or negligent processing of claims.
Mass. Mut. v. Russell
- However, the 9th Circuit has allowed state claims for Invasion of Privacy for improper
spying on a disability insurance recipient.
Dishman v. UNUM, 5/8/2001
- No preemption if complaint doesn't affect plan benefit structure
or administration, nor bind administrators to particular choices,
nor preclude uniform administrative practice.
NY BC/BS v. Travelers, 115 S.Ct. 1671 (1995)
- Denial of Benefits IS preempted - no recovery for harm
- Pilot Life v. Dedeaux, 481 US 44 (1987)
- Spain v. Aetna, (9th Circ.)1991
- State Wrongful Death claim is Preempted.
Plaintiff may recover ONLY the entitled benefits
NO pain & suffering or loss of income .
The denied benefit is worthless at time of suit.
So plaintiff usually recovers NOTHING.
- Corcoran v. United Health Care
- Malpractice claim against UR company is preempted
- Equitable remedies are allowed, but we have not seen the
more effective ones awarded. Especially in egregious cases,
it might be worthwhile to ask for them, for example:
Mertens v. Hewitt may appear to have
ruled out monetary damages, but it is clearly distinguishable
from denial of benefits claims, as there was no unjust enrichment.
- Restitution of all premiums paid.
- Disgorgement of bonuses paid to utilization reviewers for
denial of claims.
- Disgorgement of the cost of the denied course of treatment
by which the HMO has been unjustly enriched by, for example,
causing the patient's premature death.
In Bast v. Prudential the 9th Circuit
rejected the above arguments.
- Quality of Medical Care is NOT pre-empted by ERISA
- National Elevator
- ERISA does not preempt "'laws of general application
--not specifically targeting ERISA plans--
that involve traditional areas of state regulation and
do not affect relations among the principal ERISA entities."
- "As long as a state law does not affect the structure, the
administration, or the type of benefits provided by an ERISA
plan, the mere fact that the [law] has some economic impact on
the plan does not require that the [law] be invalidated."
- "Ultimately, if there is no effect on the relations among the
principal ERISA entities--the employer, the plan, the plan
fiduciaries, and the beneficiaries--there is no preemption."
- That a plan is potentially liable for a judgment "is not
enough to relate the action to the plan."
- Dukes (3d circuit)
- "Quality control of...health care benefits...is a field
traditionally occupied by state regulation, and we
interpret the silence of Congress as...intent that
it remain such."
- Vicarious liability is probably NOT preempted
- Only one Circuit Court has ruled.
- Pacificare of OK v. Burrage
- upheld vicarious liability for med mal and for
loss of consortium/wrongful death, &
- Relevant Law Review Abstract
- District Courts agreeing:
- Jackson v. Roseman,
878 F.Supp. 820, 826 (D. Md. 1995)
- Haas v. Group Health Plan, Inc.,
875 F. Supp. 544, 548 (S.D. Ill. 1994)
- "[W]hen an HMO plan elects to directly provide medical
services or leads a participant to reasonably believe
that it has, rather than simply arranging and paying
for treatment, a vicarious liability medical
practice claim based on substandard treatment
by an agent of the HMO is not preempted."
- Dearmas v. Av-Med, Inc.,
865 F. Supp. 816, 818 (S.D. Fla. 1994)
- Kearney v. U.S. Healthcare, Inc.,
859 F. Supp. 182, 186-88 (E.D. Pa. 1994)
- Burke v. Smithkline Bio-Science Labs.,
858 F. Supp. 1181, 1184 (M.D. Fla. 1994)
- Paterno v. Albuerne,
855 F. Supp. 1263, 1263-64 (S.D. Fla. 1994)
- Smith v. HMO Great Lakes,
852 F. Supp. 669, 671-72 (N.D. Ill. 1994)
- Elsesser v. Hospital of Philadelphia College of Osteopathic
Medicine, 802 F. Supp. 1286, 1290 (E.D. Pa. 1992)
- Vicarious liability allowed because unrelated to
HMO's plan obligations.
Claim for denial of benefits preempted.
- Independence HMO, Inc. v. Smith,
733 F. Supp. 983, 988 (E.D. Pa. 1990)
- District Courts disagreeing & preempting:
- Pomeroy v. Johns Hopkins Medical Servs., Inc.,
868 F. Supp. 110, 113-14 (D. Md. 1994)
- Visconti v. U.S. Health Care,
857 F. Supp. 1097, 1102-05 (E.D. Pa. 1994)
- Dukes v. U.S. Health Care Sys. of Pa., Inc.,
848 F. Supp. 39, 42-43 (E.D. Pa. 1994)
- Nealy v. U.S. Healthcare HMO,
844 F. Supp. 966, 972-73 (S.D.N.Y. 1994)
- A ... claim against an HMO alleging negligent or
fraudulent administration of the plan is preempted by ERISA.
- Ricci v. Gooberman,
840 F. Supp. 316, 317 (D.N.J. 1993)
- An Awful Example
of how hard it is to fight these problems.
- Secretary of Labor's Briefs
opposing such preemption.