If the Managed Care Organization is "related to" an Employee Benefit Plan (EBP), the requirements of ERISA, the Employee Retirement Income Security Act of 1974, and its regulations are of overriding importance, and severely restrict patient rights.
No employer is obligated to establish an EBP. In order to encourage them to do so, Congress has given them, their plans, their HMOs and Insurers, and their administrators substantial immunities from liability.
State Regulation of HMOs administered by self-insured EBPs is Preempted by ERISA, so employees cannot be protected by those state laws which limit the excesses of other HMOs, not subject to ERISA.
Any case 'relating to' an EBP falls under Federal Jurisdiction and may be removed from state to federal court.
There the patient will find that the usual state law Tort Claims are also preempted by ERISA, so any claims against the HMO or EBP for medical malpractice, wrongful death, fraud, etc. will be summarily dismissed.
True, he may sue for a benefit denied him, but the decision of the plan administrator may often be reversed only if it was found to have been Arbitrary and Capricious, a very difficult standard to meet.
Even if that is proven, ERISA limits damages to delivery of the benefit, but it may then be too late. If the patient has died or experienced further injury because of the wrongful denial of care, neither he nor his survivors may be compensated, nor will the HMO be punished in any way. If the plaintiff wins the case, the court has discretion to award him his Attorneys Fees.
ERISA plans are construed according to federal common law, but federal common law in the 9th Circuit borrows many California rules of interpretation, including contra-insurer. See Padfield v. AIG Life Ins. Co., 290 F.3d 1121 (9th Cir. 2002), and Kunin v. Benefit Trust and Life Ins. Co., 910 F.2d 534 (9th Cir. 1990).
In setting up or continuing the plan, the employer has no Fiduciary responsibility to its employees at all. If an employee develops AIDS, for example, it is perfectly legal, under ERISA, for the employer to subsequently amend the plan so as to eliminate coverage for AIDS. See McGann v. H & H Music. Fiduciary responsibility applies only to the Administration of the plan, not to determination of which benefits will be offered.
HMOs even produce training films to teach their claims managers that they don't have to do a reasonable investigation for ERISA claims - just deny them. See a discussion of such a tape which came to light in the case of Fisher v. Aetna
For a time, it seemed that one way ERISA might work to the member's advantage, at least in the 9th Circuit,
was to prevent plans from forcing "reimbursement"
of its payments from damages paid by third party tortfeasors. See Reynolds v. Ellis
However, the 9th Circuit has now (10/4/2004) clarified that position. A subrogation claim under an ERISA plan may not be brought under federal law, but the plan's STATE court claims for breach of contract against the enrollee are NOT preempted by ERISA, and may proceed. See Providence Health Plan v. McDowell. As usual under ERISA, it is the enrollee who is the loser, and the insurer who is the winner.
However, One way ERISA may be helpful is: An administrator must
provide a member with a copy of the SPD, annual report, bargaining agreement, or instrument establishing the plan,
within 30 days of the request for it. If he dosn't, he
may, at the discretion of the court, be personally liable for up to $100/day
to the plaintiff till he complies. (29 USC 1132(c)(1)(B) or (c)(3)).
This is not a penalty, but "statutory damages".
Just be sure that the request is addressed to "Plan Administrator".
P.S.: The maximum daily penalty was increased in 1997 to $110, per 29 CFR 2575.502c-3. It may be due for another increase, so check.
If the member wins his case against the plan, the court may also award him his legal fees.
It is part of the Agenda of HARP to encourage Congress to amend this unjust and one-sided law.
The court did not accept the invitation in our amicus brief to overturn Pilot Life. Indeed, their decision relies on Pilot Life as though it were the 11th Commandment.
You will probably not, in the next several decades, be able to obtain damages from your ERISA plan for its malpractice.
All the more reason to try to get non-ERISA insurance. But if you're stuck with ERISA, and the plan has denied important care, get the money somehow to get the treatment, and sue the plan for reimbursement.
If you're in a state that mandates Independent Medical Review for medical necessity denials, TREAT THAT REVIEW AS IF IT WERE A FEDERAL CASE! Because it may become one!
If you've been injured by a third party (say in an auto accident) and your ERISA plan takes care of your medical expenses, and you sue the third party and win, your ERISA plan may come after you to pay them back for what they spent. Here is an article on how to handle that problem.
For the views of the pre-Bush Department of Labor, opposing much
preemption and removal, see its
The Bush administration has cut off DOL website access to these briefs. Too consumer-friendly!
(It says "This site is experiencing technical difficulties and this page is currently unavailable". The rest of the site has no "technical difficulties.)
They can now be found at web.archive.org (What a great resource!)
If you want to argue the deference due them, see:
Chevron, 467 US 837, 843-44
Anweiler, 3 F3d 986, 993 (7th Cir. 1993).
U.S. Mosaic, 935 F2d 1249, 1255(note 6)
Carr v. First National, 816 F.Supp. 1476, 1491-92 (ND CA 1993)
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