WASHINGTON — Four years ago, then-Gov. George W. Bush cast himself as a champion of patients' rights. Pressed by Al Gore in their final presidential debate on whether patients should be allowed to sue health plans for wrongfully withholding care, he pointed to a pioneering Texas law passed on his watch. "I brought Republicans and Democrats together
But President Bush, it seems, has changed his mind. The Texas law he championed is now before the U.S. Supreme Court, and this week the administration will ask that the justices strike it down. More broadly, the administration will ask the court to abandon a body of recent precedents that expose the managed-care industry in many states to negligence suits for withholding of coverage and care. Legal accountability for denying coverage, it contends, could prevent the creation of "innovative health plans."
At the center of the dispute is a 30-year-old federal law, the Employee Retirement Income Security Act, or ERISA, enacted to safeguard workers' fringe benefits. Because the vast majority of Americans younger than 65 obtain their health insurance through the workplace, the law applies to nearly all private medical coverage.
Because ERISA nullifies state laws that conflict with it, health insurers try to use it as a shield against state laws they don't like. Above all, they dislike being sued for damages when they deny coverage. In the early 1990s, some lower courts accepted health insurers' claim that ERISA bars such suits in state courts. Because ERISA lacks an alternative tort remedy, health insurers were thereby insulated from damage suits.
But that outraged consumer groups, doctors and public officials who demanded accountability for managed care. Texas and nine other states, including California, passed "right-to-sue" laws to get around the ERISA shield. Meanwhile, federal courts, beginning in the mid-1990s, chipped away at insurers' ERISA protections.
Then, four years ago, the Supreme Court weighed in, asserting that because HMO coverage decisions involve medical judgment, ERISA doesn't shield managed care from suits filed in state courts. Because healthcare is "a subject of traditional state regulation," the court said, coverage decisions that entail medical judgment are fair game for malpractice suits. Lower courts read this statement as a directive to end managed care's immunity from suits charging wrongful denial of coverage. In the case the justices will hear this week, Aetna vs. Davila, the 5th Circuit Court of Appeals relied upon the Supreme Court statement to uphold the Texas law championed by candidate Bush but now targeted by his administration.
