US Supreme Court Argument: Does ERISA Preempt HMO's Negligent Medical Necessity Decisions?

The plaintiffs sued in state court claiming that although their doctors recommended treatment, their HMOs negligently refused to cover it. The HMOs removed the cases to federal court arguing that the claims arose under ERISA because each plaintiff received HMO coverage through an employer's ERISA plan. The federal district court refused to remand the cases to state court, and dismissed the plaintiffs' claims on the ground that they were preempted by ERISA. The 5th Circuit reversed. The US Supreme Court is reviewing the 5th Circuit decision.

Davila's primary physician prescribed Vioxx for arthritic pain. The HMO required Davila to try two different medications, and would evaluate him for Vioxx use only if he suffered a detrimental reaction or failed to improve. After three weeks using naprosyn, Davila suffered from bleeding ulcers which caused a near heart attack and internal bleeding. He sued under a Texas statute claiming the HMO acted negligently in making its medical necessity decisions.

The other plaintiff, Calad, had surgery. Although her doctor recommended a longer stay, the HMO nurse decided that a one day hospital stay would be sufficient. Calad suffered complications, and she attributed those complications to her early release.

The 5th Circuit held that the plaintiffs' claims were not preempted by ERISA Section 502(a)(2) because the HMOs were not acting as ERISA plan fiduciaries when denying them medical treatment. The claims were not preempted by Section 502(a)(1)(B) because the plaintiffs were not suing to recover plan benefits; they were asserting tort claims. The 5th Circuit said that "ERISA should not be interpreted to preempt state malpractice laws or to create a federal common law of medical malpractice."

Aetna Health v. Davila; CIGNA Healthcare of Texas v. Calad
Oral argument: Mar 23, 2004
Decision below: Roark v. Humana (5th Cir 09/17/2002)
http://www.lawmemo.com/emp/docs/5/roark.htm

This abstract was provided by LawMemo.Com, publisher of the popular Employment Law Memo email service. Editor Ross Runkel can be reached at Ross@LawMemo.Com or 1-877-399-8028.

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