Compliance October 14, 2004

Texas HMO ERISA Pre-Emption Battle Reaches an End

October 14, 2004 (PLANSPONSOR.com) - A long-running legal dispute over whether federal benefits law pre-empts state statutes in health-care coverage disputes has drawn to a close with a simple court order from a federal appeals court.
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>The US 5 th Circuit Court of Appeals ruling allowed the dismissal of a lawsuit by two health maintenance organization subscribers’ contending their HMOs violated Texas law by refusing to cover certain medical services. The appeals judges said the parties had advised the court that “the litigation is at an end.”

>The appeals court’s latest decision comes after a June ruling by the US Supreme Court in Aetna Health Inc. v. Davila, (124 S. Ct. 2488, 32 EBC 2569 (2004) (119 PBD, 6/22/04; 31 BPR 1421, 6/29/04) ruled that the Employee Retirement Income Security Act (ERISA) pre-empted the patients’ claims that their HMOs violated the Texas Health Care Liability Act when they turned down requests to pay for certain medical treatment. By agreeing with the HMOs’ argument that such suits needed to be pursued under ERISA, the court closed off the chance of the plaintiffs’ chance of getting punitive damages, which is not permitted under the federal benefits statute.

>The latest case is Calad v. CIGNA Healthcare of Texas Inc., 5th Cir., No. 01-10891, 10/12/04. The ruling is at http://www.ca5.uscourts.gov/opinions/pub/01/01-10891.cv0.wpd.pdf .

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