High Court Seeks DOJ Opinion On HMO Case

January 8, 2001 (PLANSPONSOR.com) - The US Supreme Court asked the Justice Department for its opinion on a Texas law that allowed patients to seek independent review of treatment decisions made by their HMOs - as do 38 states currently.

Resolution of the issue could affect insurance costs and procedures for employers.

However, the government’s response could take several months – and even then, the high court will need to decide if it will hear arguments and rule in the case involving a Texas law.

Texas officials have sought the Supreme Court’s opinion because of conflicting conclusions drawn by lower courts.

Patient’s Rights

The Texas statute at issue was part of a broader law that gave patients additional protections, including the right to sue in state court if an HMO failed to make treatment decisions according to an “ordinary care” standard.  The law was adopted in 1997. 

The Fifth US Circuit Court of Appeals upheld most of the state statute, which had been challenged by four Aetna subsidiaries.  However, it sided with Aetna on the independent review provision, finding that it undermined the Employee Retirement Income Security Act (ERISA), as well as the Federal Employees Health Benefits Act.

Aetna’s attorneys claimed that allowing states to weigh in would interfere with ERISA’s objective of creating uniform, national standards to employee health and retirement plans.

Bill Backers
The American Medical Association backs the appeal, as does the National Association of Insurance Commissioners and a group of 24 states, all of which filed friend-of-the-court briefs.  All say that ERISA allows states to regulate the insurance business.
In addition to Texas, 37 states and the District of Columbia currently have laws establishing some form of external review of medical treatment decisions by HMOs.

The case is Montemayor vs. Corporate Health Insurance, 00-665.

– Nevin Adams         editors@plansponsor.com