Justices Hear Arguments in HMO Review Case

January 16, 2002 (PLANSPONSOR.com) - US Supreme Court justices on Wednesday quizzed lawyers for an Illinois HMO and a Chicago woman about whether state officials can legally step in for an independent review when a patient has been denied medical coverage.

At issue is whether the Employee Retirement Income Security Act would take precedence over the laws now on the books in about 40 states.

Attorney John Roberts, representing health insurer Rush Prudential HMO, argued the Illinois law gave patients something beyond the intent of Congress. Under the Illinois law, an independent external reviewer makes a decision, which is binding and final, he said , according to a Reuters report.

“Here, it’s a new decision-maker,” said Roberts during an hour of oral arguments in Washington, D.C. “He’s (the independent medical reviewer) deciding whether the denial of benefits was proper or not.’

The Illinois law, Roberts told the justices, “changes dramatically what the plan is going to provide.’

On the other hand, plaintiff Debra Moran’s lawyer, Daniel Albers, said the Illinois law operates independently of ERISA.

But Justice Antonin Scalia questioned whether the state would substitute a new system in deciding whether Moran received the treatment she was supposed to.

Justice Department lawyer Edwin Kneedler supported Albers. He called independent reviews “a very familiar sort of approach,’ similar to getting a second opinion by another doctor.

Operation Coverage

In the case before the high court, Moran sued her insurer, Rush Prudential HMO, after it refused to pay for Moran’s shoulder operation because he doctor wasn’t in Rush’s plan.

Moran sought an independent review of her condition by an outside specialist under the Illinois HMO Act. The physician said the surgery was medically necessary. WellPoint Health Networks Inc. bought the Rush health plan in 2000.

A U.S. appeals court in Chicago ruled the external review provisions were not preempted by ERISA — a position taken by the U.S. Labor Department The justices could issue their ruling as early as this spring.