August 2001 Bulletin

Review law to High Court

Courts disagree on whether ERISA preempts states

The U.S. Supreme Court said it will hear a case in its next term on whether states may enforce laws providing for binding independent review of a decision by a health insurer to reject a procedure proposed as medically necessary.

If Congress passes a patients’ bill of rights requiring independent review boards and it becomes law before the Supreme Court hears the case in January 2002, the case will be moot. But plaintiff’s attorneys are pursuing the litigation, aware that patients’ rights has been debated in Congress for five years and there is no guarantee on what will be included in legislation, if and when it becomes law.

Thirty-seven states have laws on independent review boards to give patients an avenue of action when treatment prescribed by their doctors is not covered by their managed care plan. But lower federal courts have disagreed on whether the Employee Retirement Income Security Act (ERISA) preempts these laws.

Late last year, the U.S. 5th Circuit Court of Appeals ruled against a Texas review board saying the independent review provisions conflicted with ERISA. The Texas state lawyers appealed to the U.S. Supreme Court on behalf of the state insurance commissioner.

Later, the U.S. Court of Appeals for the 7th Circuit in Chicago reversed a ruling of the U.S. District Court for the Northern District of Illinois which had held that the state’s independent review law was preempted by ERISA. The HMO involved in the case appealed to the U.S. Supreme Court.

Meanwhile, the one-year-old Ohio review law has handled 100 independent review cases. Health insurer decisions were upheld in 52 cases, reversed in 37 and partially reversed in 11. The law in California went into effect Jan. 1, 2001. Of the 168 appeals decided so far, 110 held that the HMO recommended course of treatment was best. The HMO lost or voluntarily changed its position in 58 cases.

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