ERISA Preempts HMO Negligence Claim, Again

October 17, 2003 ( - Add the US 3rd Circuit Court of Appeals to a "rising judicial chorus" of courts struggling with Employee Retirement Income Security Act (ERISA) preemption of medical negligence claims against health maintenance organizations (HMO).

In fact, Circuit Judge Edward Becker devoted most of his separate concurring opinion inDiFelice v. Aetnato addressing the need for change in the current ERISA preemption provisions to come from either the United States Congress or Supreme Court.   ” While I thus join in [the] opinion and in the judgment, I write separately to add my voice to the rising judicial chorus urging that Congress and the Supreme Court revisit what is an unjust and increasingly tangled ERISA regime,” penned Becker.

That opinion referenced in Becker’s concurring statements foundERISA preempted an HMO subscriber’s claim that the HMO negligently interfered with his medical care by classifying a special tracheotomy tube as “medically unnecessary,” since the claim could have been brought under ERISA Section 502(a).   This decision, authored by Circuit Judge Marjorie Rendell relied in large part on Pryzbowski v. U.S. Healthcare, Inc. and reversed a lower district court’s ruling.

However, in discussing the test of quality of care versus quantity of care necessary to this analysis, Becker said, “[T]he line between an action to recover benefits, which challenges an administrative decision regarding whether a certain benefit is covered under an ERISA plan, and an action alleging negligence or malpractice, which challenges the medical treatment actually provided to a patient, is a blurry one.”

It was this line of logic detailed in the majority opinion that gave Becker his impetus for action. “ERISA has evolved into a shield that insulates HMOs from liability for even the most egregious acts of dereliction committed against plan beneficiaries, a state of affairs that I view as directly contrary to the intent of Congress.”

Yet, without any direction or amendment to the current statutes the “lower courts are routinely forced to dismiss entirely justified complaints by plan participants who have been grievously injured by HMOs and plan sponsors, all because of ERISA, the very purpose of which was to safeguard those very participants,” Becker continued.

To make sure his voice is heard, Becker directed that a copy of the opinion be sent to the US Department of Labor (DoL), andthe Chair, Ranking Member, Chief Majority Counsel, and Minority Counsel of the Senate Committee on Health, Education, Labor, and Pensions; and the Chair, Ranking Member, Chief Majority Counsel, and Minority Counsel of the House Committee on Education and the Workforce.

Case History

Joseph DiFelice was a participant in an employee welfare benefit plan administered by Aetna US Healthcare. Terms of the plan provided that only those benefits that are “medically necessary” would be covered.

In March 2001, DiFelice’s physician inserted a tracheotomy tube for a sleep apnea/upper airway obstruction.   After the initial tube was removed, DiFelice’s doctors ordered a specially designed tube that Aetna determined was “medically unnecessary” and would not be covered.   With that decision, the doctor inserted a different tube.

However, the alternative tube caused DiFelice severe pain, resulted in an infection, and led to a hospital stay.   DiFelice alleged he was thereafter discharged from the hospital “at Aetna’s insistence,” before his treating physician intended to release him.

DiFelice sued Aetna in state court, alleging negligent interference. However, Aetna had the case removed to federal court on grounds the claim was preempted by ERISA. A judge in the US District Court for the Eastern District of Pennsylvania agreed with Aetna that DiFelice’s claim was preempted because he was challenging Aetna’s decision that he was not entitled to the special tube under the plan, which was entirely a matter of administration, and because Aetna was not actually involved in providing any medical benefits to DiFelice.

The case is Difelice v. Aetna U.S. Healthcare, Third Circuit Court of Appeals, Number 02-3381.