Amicus Curiae Brief — Kentucky Assn. of Health Plans, Inc. v. Miller

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No. 00-1471

OCT 31 200° |

In The

Supreme Court of the Gnited States, |

. ——

KENTUCKY ASSOCIATION OF HEALTH

PLANS, INC., et al.,

Petitioners,

V.

JANIE MILLER, COMMISSIONER, KENTUCKY

DEPARTMENT OF INSURANCE,

Respondent.

>

On Writ Of Certiorari To The

United States Court Of Appeals

For The Sixth Circuit

°

BRIEF AMICUS CURIAE OF THE

AMERICAN COLLEGE OF LEGAL MEDICINE

IN SUPPORT OF RESPONDENT

¢

MILES J. ZAREMSKI, ESQ.

KAMENSKY & RUBENSTEIN

Suite 200

7250 North Cicero Ave.

Lincolnwood, Illinois 60712-1693

847-982-1776

Counsel of Record

GARY BIRNBAUM, M.D., Esq.

CASE WESTERN RESERVE UNIVERSITY

SCHOOL OF LAW

11075 East Blvd.

Cleveland, Ohio 44106-7148

216-368-3600

BRUCE A. BRIGHTWELL, ESQ.

730 W. Main St., Suite 200

Louisville, Kentucky 40202

502-589-6190

COCKLE LAW BRIEF PRINTING CO. (800) 225-6964 ‘ ‘4

OR CALL COLLECT (402) 342-2831 \ © \

IBEST AVAILABLE COPY

QUESTION PRESENTED

Whether Kentucky's Any Willing Provider stat-

ute is preempted by ERISA if it does not relate to

employee benefit plans or, is it saved from pre-

emption because it regulates the business of in-

surance by regulating the practice of medicine?

li

TABLE OF CONTENTS

Page

QUESTION PRESENTED..............cccccceccseseeseeeeeeeeees i

Be Gy IID orcccccceseccserscccsccostecescccccesceses ii

TABLE OF AUTHORITIES ....0........cccccccsesescesseseeeeees iii

INTEREST OF THE AMICUS CURIAE ..0.....00000000++ 1

SUMMARY OF ARGUMENT...............ccccc:esceeseseeeeeees 1

EES ER ee 3

I. KENTUCKY'S AWP STATUTE IS NOT

PREEMPTED BY ERISA BECAUSE IT

DOES NOT “RELATE TO” AN EMPLOYEE

ET IPE niceitdccstatetnescnsssenissnsremmmncseecnansens 3

A. Kentucky’s AWP statute does not have a

connection with an employee benefit plan.. 3

B. Kentuckys AWP statute does not make

sufficient reference to an employee benefit

ETS See ae eee 12

Il. KENTUCKYS AWP STATUTE IS SAVED

FROM PREEMPTION BECAUSE IT REGU-

LATES THE BUSINESS OF INSURANCE IN

ORDER TO REGULATE THE PRACTICE OF

ETRE TT CONE TEE 16

A. Kentucky has a legitimate interest under

its police powers in regulating the health

insurer’s restrictive physician membership

EERIE EELS ITs Oma ee 19

B. Kentucky has a legitimate interest under

its police powers in regulating the continu-

ity of care that its citizens. receive from

TABLE OF AUTHORITIES

Page

CASES:

Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504

I ts iesesreiteematinstindininenneantatuamnteatanenesnemmmnnanestenseestee 6

California Div. of Labor Standards v. Dillingham

Constr. N.A., Inc., 519 U.S. 316 (1997) ..............006. passim

Commissioner of Corps. of Cal. v. TakeCare Health

Plan, Inc., No. 933-0290 (Cal. Dep’t of Corps. Oct.

BR BI cececccccnsacsnsssaseneseazszescnnneneceneneneassesesasneseensnaseessed 24

Community Health Partners, Inc. v. Nichols, 14

F. Supp. 2d 991 (W.D.Ky. 1998)...........cccccsceeeeceeereeeeneens 15

DeBuono v. NYSA-ILA Med. and Clinical Servs.

Fund, 520 U.S. 806 (1997) ........cccccccccccceeeeeeeceereneeeeeeeeeees 19

FMC Corp. v. Holliday, 498 U.S. 52 (1990)..............0+ 6, 13

Hammonds v. Aetna Casualty & Surety Co., 237

F. Supp. 96 (N.D. Ohio 1965) ............cccccccceeeeeeeenerneenenees 25

Hillsborough County v. Automated Med. Lab., Inc.,

Ge FE, Fae Ce cecenecccscscnscscscnnvecceczesczesccnsececensensscssees 19

Humana Medical Plan, Inc. v. Ira S. Jacobson,

M.D., 614 S.2d 520 (Fla. App. 3rd Dist. 1992)............... 25

Ingersoll-Rand Co. v. McClendon, 498 U.S. 133

Io idiieriiesenensiebeapemmeniaeenenemnenmamnapennemesnngnsennennngnsenseenenan 13

Jacobson v. Massachusetts, 197 U.S. 11 (1905)................. 19

Jones v. Chicago HMO Ltd. of Illinois, 730 N.E.2d

Ee 21

Ky. Assoc. of Health Plans, Inc. v. Nichols, 277 F.3d

LL 3, 12,

Mackey v. Lanier Collection Agency & Service, Inc.,

OL OL,

13

iv

TABLE OF AUTHORITIES — Continued

Page

Massachusetts v. Morash, 490 U.S. 107 (1989).................. 5

New York State Conference of Blue Cross & Blue

Shield Plans v. Travelers Insurance Co., 514 U.S.

BR Cae ccnanusssecenansnscansnnnennsesenecatonnastentnsetinsemeten passim

Pegram v. Herdrich, 530 U.S. 211 (2000) ...............ccccceeeeees 6

Romer v. Evans, 517 U.S. 620 (1996) ..............ccccceeeeeeeeeeees 20

Rush Prudential HMO, Inc. v. Moran, 122 S. Ct.

0 eee 16, 17, 18, 19, 29

Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983).............. 6

Thiokol Corporation, Morton International Inc. v.

Roberts, 76 F.3d 751 (6th Cir. 1996) ................ccccccceeeeees 14

Thomas W. Self, M.D. v. Children’s Associated

ee ientinsninitnataicicinetintinatinisciadiiieensl 21

United States Dept. of Treasury v. Fabe, 508 U.S

Sr ere cecstassnesunansintisntiniseaninteiapenrsseppmusnnieamtiiss 17

United Wire, Metal & Mach. Health and Welfare

Fund v. Morristown Mem'l Hospital, 995 F.2d

ey ie ececienstinstciicnatactnnidarnsiiatnicamatitaieantpiiiaataaens 14

Washington Physicians Service Association v.

Gregoire, 147 F.3d 1039 (9th Cir. 1998)................... 10, 11

Williamson v. Lee Optical of Okla., Inc., 348 U.S.

ee nceincsienntitenririniecinintessnttitaieuaaitiiraiaaamatieidiemsintinniiiel 20

STATUTES:

SF ee OF i ccenienerancncssnsnnttnteiianbinaningatnnansiitiateitisiiiti 3

3 fT Sewanee enneees 13

Ky. Rev. Stat. Ann. § 304.17A-005(23) ...........cccccccccceeeeeeeees 16

Vv

TABLE OF AUTHORITIES -— Continued

Page

Ky. Rev. Stat. Ann. § 304.17A-270 ...........ccccccccceeeereeeeeeeees 16

OT Eee

MISCELLANEOUS:

30 J. Law, Med. & Ethics 312 (2002).............c.:cccccceeeeeeeeees 23

Arch G. Mainous III, et al, Continuity of Care and

Trust in One’s Physician: Evidence from Primary

Care in the United States and the United King-

dom, 33 Family Medicine 22, 27 (2001)................0000000+ 28

Audiey C. Kao, et al., Patients’ Trust In Their

Physicians, 13 Journal General Internal Medi-

ae 27

Barry R. Furrow, et al., Health Law Sec. 8-1 (1995)......... 16

Christopher B. Forrest, et al., Managed Care,

Primary Care, and the Patient-practitioner Rela-

tionship, 17(4) Journal of General Internal Medi-

ne I cee rnterenccnnensennesenemmegnentimtssrssesesssceneneneses 27

David Orentlicher, Health Care Reform and the

Patient-Physician Relationship, 5 Health Matrix

Journal of Law Medicine 141, 143 (Winter 1995) ......... 26

Dianne McCarthy, Narrowing Provider Choice: Any

Willing Provider Laws After New York Blue Cross

v. Travelers, 23 Am. J.L. & Med. 97, 107-108

Elisabeth Rosenthal, Complications In Care - A

Special Report: Patients With Difficult Illnesses

Fight New HMO’s To Get Help, N.Y. Times Al

GN BR, Bi eccerescnsccccessvessessessnesscsnsscssemmmscssrresnssseess 24

vi

TABLE OF AUTHORITIES -— Continued

Ezekiel J. Emanuel and Nancy Neveloff Dubler,

Preserving the Physician-Patient Relationship in

the Era of Managed Care, 273 J.A.M.A. 323, 327

George E. Kikano, et al., ‘My Insurance Changed’:

The Negative Effects of Forced Discontinuity of

Care, Family Practice Management, http://www.

aafp.org/fpm/20001100/44myin.html........................

James M. Gill and Arch G. Mainous III, The Role of

Provider Continuity in Preventing Hospitaliza-

tions, 7 Archives of Family Medicine 352, 357

Joseph White, Choice, Trust, and Two Models of

Quality, 24 J. Health Pol., Poly. & Law 996

Julie Marquis, Verdict for Doctor in HMO Case Hits

Nerve, Los Angeles Times, Al, A24 (April 15,

Sippel cocecsrecesemncsnscsnnnsnennsnasesseansesstisentinenetenimmantsinsiovens

Justin Goodyear, What is an Employee Benefit

Plan ?: ERISA Preemption of “Any Willing Pro-

vider” Laws After Pegram, 101 Colum. L. Rev.

BES GID cceccssnsenesseenstentncmesineceseumnennsteutenenestasimmmenees

Karen A. Jordan, Travelers Insurance: New Support

for the Argument to Restrain ERISA Preemption,

13 Yale J.Reg. 255, 331 (1996) ............ccccccccesesseseeneees

Kathy Kinsey, Settlement Helps Patch Up Physi-

cian’s Firing, Verdicts & Settlements Supplement

to the Los Angeles Daily Journal, 1, 4, 8 (June

SER, GEDUUIED ccccnsayssnnesstnssevensssncsonsmemeonsensemmmrenanenatenteassiteia

Vii

TABLE OF AUTHORITIES — Continued

Larry J. Pittman, “Any Willing Provider” Laws And

ERISA’s Saving Clause: A New Solution For An

Old Problem, 64 Tenn. L. Rev. 409, 412 n.11

Linda H. Aiken, et al., Hospital Nurse Staffing and

Patient Mortality, Nurse Burnout, and Job Dis-

satisfaction, 288(16) J.A.M.A. 1987 (2002)..............

Linda J. Weiss and Jan Blustein, Faithful Patients:

The Effect of Long-Term Physician-Patient Rela-

tionships on the Costs and Use of Health Care by

Older Americans, 86 American Journal of Public

Health 1742 (1996).................0ccccccccccssesrerssssereersoreees

Margaret M. Love and Arch G. Mainous III, Com-

mitment to a Regular Physician: How Long Will

Patients Wait to See Their Own Physician for

Acute Illness?, 48 The Journal of Family Practice

Margaret Love, et al., Continuity of Care and the

Physician-Patient Relationship, 49 The Journal

of Family Practice 998, 1004 (2000) ................c00000+

Marilyn Lablaiks, Bad Medicine: ERISA’s Equita-

ble Remedies and the Preemption of Fundamen-

tal Legal Rights, 34 J. Marshall L. Rev. 583, 609

(Wilander BOO1) ....cccccccscocrrrcocccccsccscsscccccsssscsscscsssoosssese

Mark A. Peterson, Introduction: Politics, Mispercep-

tion, or Apropos?, 24 J. Health Pol., Poly. & Law

BIS (1BBD) ..ccccccecccceccccccocesesccccsesccccssccssccosessssoosssssoooees

Mark O. Hiepler and Brian C. Dunn, Irreconcilable

Differences: Why The Doctor-Patient Relationship

Is Disintegrating At The Hands Of Health Main-

tenance Organizations And Wall Street, 25 Pep-

perdine L. Rev. 597 (1998) ..............cccccseeereeeseneeeeees

ed

TABLE OF AUTHORITIES -— Continued

Page

Patrick Howington, Rising Costs Means Health-

Insurance Change, Courier-Journal, B1 (August

SE ei arrenininiribticiciinicdandnniticinnadininiintisittaiiiaditadtimieanmdases! 27

Robert J. Shouldice, Introduction to Managed Care

nS ee ee 24

Sheryl Gay Stolberg, Patient Deaths Tied to Lack of

Nurses, N.Y. Times, A-18 (August 8, 2002).................... 23

Susan A. Flocke, 7‘he Impact of Insurance Type and

Forced Discontinuity on the Delivery of Primary

Care, 45 The Journal of Family Practice 129,

ee hictiadncietatiniannicinnicensdmnaiiaminsi tistical 26

William J. Bahr, Although Offering More Freedom

to Choose, “Any Willing Provider” Legislation is

the Wrong Choice, 45 U.Kan.L.Rev. 557, 582

1

BRIEF AMICUS CURIAE

INTEREST OF THE AMICUS CURIAE’

The American College of Legal Medicine (“ACLM”)

has been in existence for 43 years and is an educational,

non-profit organization with over 1300 members. It is the

only organization of its kind in the sense that the majority

of its members hold dual degrees in medicine and in law.

Its membership also consists of attorneys, physicians,

nurses, those in health care administration, in govern-

ment service and those who hold full time academic

positions in health care and health care law.

The mission of the ACLM is to educate, train and

advance. dialogue and discussion for those who have a

sustained interest in issues at the crossroads of law,

medicine and health care law. This includes promoting the

administration of justice and assisting jurists in issues,

such as the ones presented in this case.

¢

SUMMARY OF ARGUMENT

Kentucky's Any Willing Provider (“AWP”) statute is

not preempted by ERISA because it does not relate to an

employee benefit plan (“EBP”). If this Court determines

that the statute does relate to an EBP, the statute is saved

' Petitioners and respondent have filed global consents to the filing

of all amicus briefs in this case. No counsel for a party authored this

brief in whole or in part. No persons or entities other than the amicus

made a monetary contribution.te-the preparation or submission of this

brief.

2

from preemption because it regulates the business of

insurance by regulating the practice of medicine.

The AWP statute does not relate to an EBP because it

does not have a connection with, or a reference to, an EBP

sufficient to trigger preemption. There is no connection

because the statute does not directly affect an EBP nor

does it bear indirectly but substantially on an EBP. There

is no reference to an EBP sufficient to trigger preemption

because the statute does not act immediately and exclu-

sively on an EBP nor is the existence of an EBP essential

to the law’s operation.

Further, in the alternative, the AWP statute is saved

from preemption because the statute regulates the busi-

ness of insurance by regulating the practice of medicine.

The AWP statute regulates the business of insurance

because it satisfies the common-sense enquiry as well as

an analysis of the three McCarran-Ferguson criteria that

are usec to assess whether a statute is saved from ERISA

preemption. The AWP statute regulates the practice of

medicine because it counteracts the scheme of assigning

too many patients to any one doctor, which can create a

high patient volume medical practice. The scheme of

restricting physician membership and limiting the number

of doctors in a health insurance network can increase the

patient to physician ratio in individual physician prac-

tices. This can result in deleterious consequences for

patients because any one patient may not receive the

necessary attention, care and treatment by reasonable

medical standards. The AWP statute also promotes conti-

nuity of patient care because under the statute, health

insurers cannot deny membership to a doctor who wantr

to join a health insurer to which his patient has trans-

ferred. Continuity of care preserves the patient-physician

TOIT a. es ome

3

relationship, which has a salutary effect on the health care

of patients. This scheme is subject to regulation by Ken-

tucky under its police powers.

+

ARGUMENT

I. KENTUCKY'S AWP STATUTE IS NOT PRE-

EMPTED BY ERISA BECAUSE IT DOES NOT

“",ELATE TO” AN EMPLOYEE BENEFIT PLAN.

Kentucky's AWP statute is only preempted by ERISA if

it meets ERISA’s express preemption provision, § 514(a), 29

U.S.C. § 1144(a). Section 514(a) provides in pertinent part:

. this chapter shall supersede any and all

State laws insofar as they may now or hereafter

relate to any employee benefit plan. ...

The Sixth Circuit found Kentuckys AWP statute

preempted by § 514(a) because it did “relate to” an EBP.

Ky. Assoc. of Health Plans, Inc. v. Nichols, 277 F.3d 352,

363 (6th Cir. 2000). The Petitioners’ Brief claims there is

no serious dispute that Kentucky's AWP laws “relate to”

EBPs. (Brief at p. 12.) However, ACLM submits the Sixth

Circuit erred in this determination and this Court should

find that Kentuckys AWP statute is not preempted by

§ 514(a) because it does not “relate to” an EBP.

This Court has addressed preemption claims with the

starting presumption that Congress does not intend to

supplant state law. New York State Conference of Blue

Cross & Blue Shield Plans v. Travelers Insurance Co., 514

U.S. 645, 654-55 (1995). Traditional preemption analysis

begins with the text of the provision in question and moves

on to the structure and purpose of the Act in which it

occurs. Id. at 655. This Court observed in Travelers that

a

the language of §514(a) is not particularly helpful in

deciding preemptiun issues.

If “relate to” were taken to extend to the furthest

stretch of its indeterminacy, then for all practical

purposes preemption would never run its course,

for “[rjeally, universally, relations stop nowhere,”

514 U.S. at 655.

To determine whether a law “relates to” an EBP, this

Court has formulated a two part test under which a “law

‘relate[s] to’ a covered employee benefit plan for purposes

of § 514(a) if it [1] has a connection with or [2] reference to

such plan.” California Div. of Labor Standards v. Dilling-

ham Constr. N.A., Inc., 519 U.S. 316, 324 (1997) (internal

quotations and citations omitted) (emphasis added). A

careful analysis of Kentucky AWP statute finds that it

does not meet either of these prongs and therefore, is not

preempted by ERISA.

A. Kentucky’s AWP statute does not have a

connection with an employee benefit plan.

The ACLM submits that Kentucky's AWP statute does

not have a “connection with” an EBP sufficient to trigger

ERISA preemption because it is does not directly affect any

EBP, nor bear indirectly, but substantially, on any EBP.

1. Kentucky’s AWP law does not directly

affect any employee benefit plans.

In Travelers, this Court began its analysis of the

“connection with” test by noting that: “For the same

reasons that infinite relations cannot be the measure of

preemption, neither can infinite connections.” Jd. at 656.

5

This Court found that it “must go beyond the unhelpful

text and the frustrating difficulty of defining its key term,

and look instead to the objectives of the ERISA statute as

a guide to the scope of the state law that Congress under-

stood would survive.” Jd. In analyzing preemption this

Court has noted several different purposes for ERISA.

In Travelers, this Court found Congress intended

§ 514(a),

“to ensure that plans and plan sponsors would be

subject to a uniform body of benefits law; the

goal was to minimize the administrative and fi-

nancial burden of complying with conflicting di-

rectives among States or between States and the

Federal Government ... , [and to prevent] the

potential for conflict in substantive law ... re-

quiring the tailoring of plans and employer con-

duct to the peculiarities of the law of each

jurisdiction.”

Id. at 657-658, citing Ingersoll-Rand, 498 U.S., at 142.

In Dillingham Construction, this Court cited Massa-

chusetts v. Morash, 490 U.S. 107, 115 (1989) for the finding

that:

In enacting ERISA, Congress’ primary concern

was with the mismanagement of funds accumu-

lated to finance employee benefits and the failure

to pay employees benefits from accumulated

funds. To that end, it established extensive re-

porting, disclosure, and fiduciary duty require-

ments to insure against the possibility that the

employee’s expectation of the benefit would be

defeated through poor management by the plan

administrator.

519 U.S. at 326-327.

6

Certainly, this latter finding of congressional purpose

is more consistent with ERISA’s full name —- Employee

Retirement Income Security Act. However, Kentucky's

AWP law is not directly related to either purpose.

In Travelers, this Court stated it had no problem

finding the “relates to” test was met when state laws

“mandated employee benefit structures or their admini-

stration.” 514 U.S. at 657. The examples of such cases

cited by this Court included: Shaw v. Delta Air Lines, Inc.,

463 U.S. 85 (1983) (New York law that required employers

to provide certain benefits for pregnancy); FMC Corp. v.

Holliday, 498 U.S. 52 (1990), (Pennsylvania law that

prohibited employer plans to subrogate their employee's

claims from a liable third party); and Alessi v. Raybestos-

Manhattan, Inc., 451 U.S. 504 (1981) (New Jersey law that

prevented plans from calculating benefits using a method

that was permitted by federal law). The common thread

running through all of these cases was that the state had

passed a statute, which directly required a plan to take (or

not to take) certain action with regard to the provision of

its benefits.

Kentucky's AWP law does not conflict with the goals of

ERISA because it does not require any employer providing

an EBP to do anything. It simply requires that all health

insurance providers operating in Kentucky meet certain

requirements. The analysis of this issue shows how the

Petitioners miss a fundamental point.

As this Court noted in Pegram v. Herdrich, 530 U.S.

211, 227 (2000), “The HMO is not the ERISA plan, ...”

Id. (Emphasis added.) Applying this fundamental principle

7

to Kentucky’s AWP statute finds that it is not preempted

by ERISA.

Kentucky's AWP statute does not directly affect any

EBPs that are covered by ERISA. No Kentucky employer

is forced by this statute to offer a particular type of health

care coverage as a benefit (or even any such coverage at

all). If an employer does not offer health care coverage as a

benefit the employer is not affected by the statute. If an

employer offers a self-funded plan the employer is not

affected by the statute. If an employer does purchase some

type of health insurance benefits for its employees it is not

told what type of benefits it must provide. Instead, the

employer only finds when shopping for a health insurer

that all of the health insurers who have sought the privi-

lege of doing business in Kentucky have to comply with

this statute.’

* This position has been taken by many of the legal commentators

examining this issue. See: William J. Bahr, Although Offering More

Freedom to Choose, “Any Willing Provider” Legislation is the Wrong

Choice, 45 U.Kan.L.Rev. 557, 582 (1996) (Any willing provider statutes

do not regulate ERISA plans because there is only an indirect effect on

ERISA plans and does not prevent a uniform administration of benefit

plans.); Karen A. Jordan, Travelers Insurance: New Support for the

Argument to Restrain ERISA Preemption, 13 Yale J.Reg. 255, 331

(1996) (“Even if provided by the entity which also provides administra-

tion of plans for employers, the selection of network physicians should

not be characterized as administration of an ERISA plan.); Justin

Goodyear, What is an Employee Benefit Plan?: ERISA Preemption of

“Any Willing Provider” Laws After Pegram, 101 Colum. L. Rev. 1107

(2001) (State laws that regulate the relationship between managed care

organizations and health care providers should not be preempted by

ERISA.); Dianne McCarthy, Narrowing Provider Choice: Any Willing

Provider Laws After New York Blue Cross v. Travelers, 23 Am. J.L. &

Med. 97, 107-108 (1997) (“Like the surcharges analyzed in New York

(Continued on following page)

Thus, any of the burdens imposed by Kentucky's AWP

statute fall not on EBPs, but only on the health insurance

companies who seek to do business in Kentucky by offer-

ing health insurance to EBPs. Because the HMO is not the

ERISA plan, the AWP statute does not directly affect the

ERISA plan.

2. Kentucky’s AWP statute does not have

an indirect, but substantial effect on

any ERISA plans sufficient to find pre-

emption.

As shown, Kentuckys AWP law is not preempted

because it does not directly affect any ERISA plans. The

Petitioners apparently concede this point because their

Brief does not argue that the AWP statute directly affects

ERISA plans. Instead, the Petitioners argue that AWP

laws “bear indirectly but substantially on all insured

benefit plans by precluding them from purchasing medical

coverage from HMOs with limited provider networks.”

(Petitioners’ Brief, p. 12.)

However, that argument would leave every Kentucky

statute related to the provision of health care subject to

ERISA preemption. For example, Ky. Rev. Stat. Ann.

§ 311.571 requires individuals to meet certain qualifica-

Blue Cross, “Any Willing Provider” laws indirectly affect ERISA plans,

“Any Willing Provider” statutes neither function as a regulation of the

plan itself, nor preclude uniform administrative practice or the provi-

sion of a uniform interstate benefit package. Furthermore, “Any Willing

Provider” laws do ret thwart the purpose of ERISA - to ensure that

employee benefits plans are not required to alter their structure in

response to individual state laws.”)

9

tions to be licensed physicians. Using the Petitioners’

“analysis”, this statute is preempted by ERISA, because it

bears indirectly but substantially on all EBPs by preclud-

ing them from purchasing medical coverage from HMOs

that use physicians who graduated from unaccredited

schools. The absurdity of such a result is the reason this

Court has recognized that a mere indirect, economic effect

on an ERISA plan is not enough to preempt state law.

In Travelers, this Court modified the “connection with”

test by asking whether the law brought about an indirect

economic effect that merely affected the rates charged by

plans as opposed to the choices made by plan administra-

tors. This Court found that “An indirect economic influ-

ence, however, does not bind plan administrators to any

particular choice and thus function as a regulation of an

ERISA plan itself....” Instead, “It simply bears on the

costs of benefits and the relative costs of competing insur-

ance to provide them.” 514 U.S. at 659-660. Further, this

Court noted in Travelers:

Indeed, to read the pre-emption provision as

displacing all state laws affecting costs and

charges on the theory that they indirectly relate

to ERISA plans that purchase insurance policies

or HMO memberships that would cover such ser-

vices would effectively read the limiting language

in § 514(a) out of the statute, a conclusion that

would violate basic principles of statutory inter-

pretation and could not be squared with our prior

pronouncement that “[p]re-emption does not oc-

cur ... if the state law has only a tenuous, re-

mote, or peripheral connection with covered

plans, as is the case with many laws of general

applicability.” District of Columbia v. Greater

Washington Bd. of Trade, 506 U.S., at 130 n.1,

10

113 S.Ct., at 583 n.1 (internal quotation marks

and citations omitted).

514 U.S. at 661.

Thus, in finding that the statute in issue was not

preempted, this Court held:

In sum, cost uniformity was almost certainly not

an object of pre-emption, just as laws with only

an indirect economic effect on the relative costs

of various health insurance packages in a given

State are a far cry from those “conflicting direc-

tives” from which Congress meant to insulate

ERISA plans. See 498 U.S., at 142, 111 S.Ct., at

484. Such state laws leave plan administrators

right where they would be in an: case, with the

responsivility to choose the best overall coverage

for the money. We therefore conclude that such

state laws do not bear the requisite “connection

with” ERISA plans to trigger pre-emption.

514 U.S. at 662.

This Court adopted the same rationale in Dillingham

and found the prevailing wage statute in issue was not

preempted because:

The wages to be paid on public works projects

and the substantive standards to be applied to

apprenticeship training programs are, however,

quite remote from the areas with which ERISA is

expressly concerned — “‘reporting, disclosure, fi-

duciary responsibility, and the like.’”

519 U.S. at 331 (citations omitted).

The principle that indirect economic effects of a state

statute are not sufficient to trigger ERISA preemption was

articulated in Washington Physicians Service Association

* «

11

v. Gregoire, 147 F.3d 1039 (9th Cir. 1998), which upheld a

Washington law that mandated the inclusion of all catego-

ries of providers. In rejecting ERISA preemption, the court

held:

The mere fact that many ERISA plans choose to

buy health insurance for their plan members

does not cause a regulation of health insurance

automatically to “relate to” an employee benefit

plan — just as a plan’s decision to buy an apple a

day for every employee, or to offer employees a

gym membership, does not cause all state regula-

tion of apples and gyms to “relate to” employee

benefit plans.

Id. at 1043.

This analysis is bolstered by the fact that ERISA is

totally silent on this issue. This Court noted in Dilling-

ham, “A reading of § 514(a) resulting in the pre-emption of

traditionally state-regulated substantive law in those

areas where ERISA has nothing to say would be ‘unset-

tling’.” 519 U.S. at 331 (citations omitted). Because there

is no conflict between the language of ERISA and Ken-

tucky’s AWP statute, it does not directly affect any EBPs.

Requiring health care insurers who have sought the

privilege of doing business in Kentucky to include provid-

ers who are willing and able to meet all of their contrac-

tual requirements does not require EBPs to structure their

benefits or conduct their internal affairs in any particular

way. The AWP statute does not prohibit EBPs from offer-

ing coverage through a preferred provider organization or

specify the terms of the provider contracts. The AWP

statute does not impair a plan sponsor’s ability to offer the

same benefits to employees in different states. It does not

require any ERISA plan to pay any benefit, any level of

12

benefit, or any particular amount of a patient’s medical

bill. In sum, it does not impose any substantive require-

ments on ERISA plans.

Just as this Court in Dillingham found that Califor-

nia’s prevailing wage statute for contractors did “... not

dictate the choices facing ERISA plans.” 519 U.S. at 334,

this Court should find that Kentucky's AWP law for health

insurance carriers does not dictate the choices facing

ERISA plans.

Thus, because Kentuckys AWP statute does not

directly relate to any employee benefit plan it is not

preempted by ERISA.

B. Kentucky’s AWP statute does not make suf-

ficient reference to an employee benefit

plan to trigger preemption.

Here, the Sixth Circuit found that the “referemee to”

test was met because:

under Kentucky's statute, “health benefit plans”

were defined to include, among other things, “a

self-insured plan or plan provided by a multiple

employer welfare arrangement, to the extent

permitted by ERISA.”

Nichols, at 359.

This Court has held that: “Where a State’s law acts

immediately and exclusively upon ERISA plans, as in

Mackey, or where the existence of ERISA plans is essential

to the law’s operation, as in Greater Washington Bd. of

Trade and Ingersoll-Rand, that ‘reference’ will result in

pre-emption.” Dillingham, 326. Thus, this Court has found

the “reference to” provision triggered preemption in

13

certain cases: Greater Washington Bd. of Trade, supra, at

130-131 (law that “impos[ed] requirements by reference to

[ERISA] covered programs,”; Mackey v. Lanier Collection

Agency & Service, Inc., 486 U.S. 825, 828, n.2, 829-830,

(1988) (law that specifically exempted ERISA plans from

an otherwise generally applicable garnishment provision);

Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 140 (1990)

(common-law cause of action was premised on the exis-

tence of an ERISA plan).

The Sixth Circuit’s holding ignores the Dillingham

analysis. The reference to ERISA in Kentucky AWP

statute does not trigger preemption because it does not

cause the law to act immediately and exclusively upon

ERISA plans, nor is the existence of an ERISA plan

essential to the law’s operation.

The Sixth Circuit noted but rejected Kentucky's

argument that the statute’s definition merely restated “the

‘deemer clause’ by exempting self-insured ERISA plans

from the scope of the AWP statute.” Nichols, at 361. (The

‘deemer clause’ of ERISA, §514(b)(2XB), 29 U.S.C.

1144(bX 2B), prevents states from regulating self-insured

plans under the guise of regulating insurance. FMC Corp.

v. Holliday, 498 U.S. 52, 61 (1990).) The ACLM submits

the Sixth Circuit erred by rejecting this argument.

The use of the term “ERISA” in Kentuckys AWP

statute does not single out ERISA plans for differing

treatment as in Mackey or refer to such plans because they

are necessary for its operation, as in Greater Washington

Board of Trade. Rather, it simply acknowledges the limits

on the scope of state laws imposed by the deemer clause.

Thus, Kentucky AWP law treats all insurers and all

14

plans (ERISA and non-ERISA) alike to the extent permit-

ted by federal law. If just the use of the term “ERISA” was,

by itself, sufficient to warrant preemption, it would create

the perverse result that Kentucky’s express acknowledg-

ment of the limits imposed by the deemer clause would

render the AWP law preempted. Under that scenario two

different states could pass two identical statutes, except

that one expressly acknowledged the deemer clause. One

statute would be preempted and one would not. The

inconsistency of such a result shows that the “reference to”

test is not met simply because a statute uses the word

“ERISA” somewhere in its text. Otherwise, determining

whether a state’s statute is preempted by ERISA would be

more like searching through an ancient text for a magic

talisman instead of engaging in a careful and logical

analysis of its history and purpose.

This approach was used by the court in United Wire,

Metal & Mach. Health and Welfare Fund v. Morristown

Mem’! Hospital, 995 F.2d 1179 (3d Cir. 1993). In that case,

it was argued that a statute was preempted because it

expressly referred to “self funded union plans” as an

example of a “third party payor”. The court rejected that

“magic words” argument, and held that “Where, as here, a

reference to an ERISA plan can be excised without alter-

ing the legal effect of a statute in any way, we believe the

reference should be regarded as without legal consequence

for [preemption] purposes.” Jd. at 1192, n.6. Similarly, the

court in Thiokol Corporation, Morton International Inc. v.

Roberts, 76 F.3d 751, 760 (6th Cir. 1996), held that “the

underlying purpose of ERISA preemptior ... is to prevent

impermissible effects, not references.”

15

Indeed, the District Court in Community Health

Partners, Inc. v. Nichols, 14 F. Supp. 2d 991 (W.D.Ky.

1998), adopted this analysis:

In the present case, on the other hand, the exis-

tence of employee benefit plans is not essential to

the operation of Kentucky's AWP law. By defini-

tion, the statute applies to the contracts or

“plans” by which certain entities assume finan-

cial risk for various health-related occurrences.

Although ERISA self-insured employee welfare

benefit plans and MEWAs are among the risk-

bearing entities referenced in the statute, these

ERISA plans are by no means the only entities

affected by the statute. Moreover, although the

non-ERISA entities — such as insurance compa-

nies and HMOs - defined in the statute primar-

ily contract directly with insured ERISA plans,

they also contract with private individuals and

groups not affected by ERISA. Thus, it does not

meet the requirements of the “reference to” test.

Id. at 996.

The ACLM submits that an ERISA preemption analy-

sis should do more than look for the “magic word”. Al-

though Kentucky's AWP statute uses the word ERISA, it

only does so to acknowledge the existence of the deemer

clause. This statute does not use the term in order to act

exclusively upon ERISA plans. Thus, this Court should

find that the “reference to” test has not been met.

16

Il. KENTUCKY'S AWP STATUTE IS SAVED FROM

PREEMPTION BECAUSE IT REGULATES THE

BUSINESS OF INSURANCE IN ORDER TO

REGULATE THE PRACTICE OF MEDICINE.

Alternatively, should this Court find that there is

preemption, then the Kentucky AWP statute regulates the

business of insurance in order to regulate the practice of

medicine and thus is saved from ERISA preemption. The

AWP statute regulates the business of insurance because

it targets “health insurers.” Ky. Rev. Stat. Ann. § 304.17A-

270. § 304.17A-005(23) defines these entities. The term

health insurer includes hybrid organizations composed to

arrange and provide health care as well as to insure

subscribers for the risk of illness. This Court has stated in

Rush Prudential HMO, Inc. v. Moran, 122 S.Ct. 2151

(2002) that an HMO“... provides health care, and it does

so as an insurer” Jd. at 2160, and that “ ... virtually al!

commentators on the American health care system de-

scribe HMOs as a combination of insurer and provider.” Id.

at 2161. Also, “Nor do we see anything standing in the way

of applying the saving clause if we assume that the gen-

eral state definition of HMO would include a contractor

that provides only administrative services for a self-funded

plan.” Jd. at 2162. Here, the term health insurer is used

interchangeably with the term managed care organization

(“MCO”). Managed care organizations include health

maintenance organizations (“HMOs”), preferred provider

organizations (“PPOs”), exclusive provider organizations,

and certain integrated health care delivery systems. See

Barry R. Furrow, et al., Health Law Sec. 8-1 (1995), Larry

J. Pittman, “Any Willing Provider” Laws and ERISA’s

Saving Clause: A New Solution For An Old Problem, 64

Tenn. L. Rev. 409, 412 n.11 (1997).

17

The AWP statute regulates the business of insurance

under the same common sense analysis used in Rush

Prudential, 122 S.Ct. 2151, 2159-2163. The statute is

directed at insurer MCOs and concerns itself with the

composition of their physician networks that deliver the

care obligations to the patients who are MCO subscribers.

It mandates that these health insurers, licensed by and

under the regulation of the Respondent, Kentucky De-

partment of Insurance, open up their restrictive physician

panels to any Kentucky licensed physician who is willing

to meet the terms and conditions of the MCO. The statute

does not control these terms and conditions. The statute

targets essentially the same entities as the independent

review statute in Rush Prudential.

The statute also passes the three McCarran-Ferguson

tesis. First, the statute does target the spreading of risk

between the health insurer and the patient insured,

although it is not necessary to satisfy this risk-spreading

prong to find the statute is saved from preemption. Rush

Prudential, 122 S. Ct. 2151, 2163. The patient’s employer

pays a fee to cover the risk of illness in return for the

promise of a care obligation. If the patient gets ill, the

health insurer then fulfills its care obligation. The care

obligation, which is the actual performance of the insur-

ance contract, is inextricably intertwined with the compo-

sition of the physician network. This Court has stated,

“There can be no doubt that the actual performance of an

insurance contract falls within the ‘business of insurance,’

as we understood that phrase in Pireno and Royal Drug.”

United States Dept. of Treasury v. Fabe, 508 U.S 491, 503

(1993). Under the AWP statute, the risk of not having the

most appropriate doctors in the network for the patient's

specific circumstance is reduced and spread to the insurer

18

who must accept any willing provider. Second, the AWP

statute regulates an integral part of the policy relationship

between the insurer and the insured, i.e. who will perform

the care obligation because patients are basically con-

cerned with which doctors in their MCO network they can

choose for their care. The third factor is satisfied based on

the analysis in Rush Prudential, 122 S. Ct. 2151, 2164.

Finally, ACLM agrees with the suggestion that this Court

find that state AWP laws avoid preemption if they were

enacted for “the purpose of” regulating the business of

insurance. Larry J. Pittman, “Any Willing Provider” Laws

And ERISA’s Saving Clause: A New Solution For An Old

Problem, 64 Tenn. L. Rev. 409, 496 (1997). Accordingly, the

AWP statute regulates the business of insurance.

Moreover, the AWP statute regulates health insurers

and their business of insurance in order to regulate the

practice of medicine. This statute can increase the number

of doctors in the health insurer’s network of physicians,

which promotes patients having a greater choice of physi-

cians and more access to their preferred physician. This

statute also counteracts the scheme of assigning too many

patients to any one doctor such that their practice will

have an excessive volume of patients. Under the AWP

statute patients are more likely to receive the care and

attention they require when going to their doctor with

health problems. In Rush Prudential 122 S. Ct. 2151, this

Court concluded: “States regulate insurance in looking out

for the welfare of their citizens,” Jd. at 2170 and“...

regulating insurance tied to what is medically necessary is

probably inseparable from enforcing the quintessentially

state-law standards of reasonable medical care,” Jd. at

2171. The Court also noted: “Illinois has chosen to regulate

insurance as one way to regulate the practice of medicine,

19

which we have previously held to be permissible under

ERISA, see Metropolitan Life, 471 U.S., at 741.” Id. at

2170-71.

A. Kentucky has a legitimate interest under

its police powers in regulating the health

insurer’s restrictive physician member-

ship policy.

The power to regulate the practice of medicine is

traditionally reserved to the states through their ability to

regulate health care absent clear expressed Congressional

intent to the contrary. See Travelers, 514 U.S. 645 (1995),

Dillingham, 519 U.S. 316 (1997), and Rush Prudential,

122 S.Ct. 2151 (2002).

States derive their authority to regulate health care

from ‘the state police power, which is derived from the

Tenth Amendment. See Jacobson v. Massachusetts, 197

U.S. 11, 25 (1905). As states can best assess the health

needs of their own citizens and enact laws to address those

needs, health care is “primarily, and historically, a matter

of local concern.” Hillsborough County v. Automated Med.

Lab., Inc., 471 U.S. 707, 719 (1985). This Court has

worked on the assumption that the historic police powers

of the States were not to be superseded by ERISA “unless

that was the clear and manifest intent of Congress.”

Travelers, 514 U.S. 645, 655 (1995). In DeBuono v. NYSA-

ILA Med. and Clinical Servs. Fund, 520 U.S. 806, 814

(1997), this Court noted that Congress did not intend for

§ 514 of ERISA to displace general health care regulation,

an area traditionally of local concern. It has also been

observed that, “The misuse of ERISA preemption clearly

usurps the state’s power to protect its citizens.” Marilyn

Lablaiks, Bad Medicine: ERISA’s Equitable Remedies and

20

the Preemption of Fundamental Legal Rights, 34 J. Mar-

shall L. Rev. 583, 609 (Winter 2001).

The AWP statute is a health care regulation, which

encompasses the practice of medicine to promote the

health and safety of Kentucky's citizens by allowing more

physicians to serve a given patient population. This Court

has affirmed that: “In the ordinary case, a law will be

sustained if it can be said to advance a legitimate govern-

ment interest, even if the law seems unwise or works to

the disadvantage of a particular group, or if the rationale

for it seems tenuous.” Romer v. Evans, 517 U.S. 620, 632

(1996). “But it is for the legislature, not the courts, to

balance the advantages and disadvantages of the new

requirement.” Williamson v. Lee Optical of Okla., Inc., 348

U.S. 483, 487 (1955). Although the Petitioners and their

amici make several public policy arguments against this

statute, the fact is that the Kentucky Legislature is free to

make the policy choices it deems best as long as those

choices are not legally preempted by ERISA.

The Petitioners’ Brief on page 2 claims that: “In

exchange for their rate discount, participating providers

receive the advantage of access to the HMOs’ subscribers

and, consequently, increased patient volume over non-

network providers who lack such access.” Further, “the

value of network membership (and, accordingly, the

amount providers will agree to discount their services)

depends on the HMOs’ ability to limit the number of

providers in the network; the fewer the providers, the

greater the patient volume for each provider.”

However, ACLM believes Kentucky has a legitimate

interest to regulate the practice of medicine and protect its

citizens regarding the number of physicians in an MCO

21

panel, which relates to the volume of patients in a medical

practice. As a matter of common sense, a high volume of

patients with discounted professional fees could have a

direct effect on the health care that patients receive. The

higher volume can make it more difficult for patient's

phone calls to get through to their doctors; make it longer

to get in for an appointment; and make the patient have to

wait longer to get into the examination room. Less time

will be available to obtain a complaint, history of present

illness, and to acquire or refresh the doctor’s knowledge

regarding medical history, medications, and allergies. Less

time will also be available to conduct an examination,

formulate a diagnosis, decide on what tests should be

ordered and what treatments should be prescribed. All of

these factors obviously impact on the practice of medicine.

Two cases are illustrative of this point. In Jones v.

Chicago HMO Ltd. of Illinois, 730 N.E.2d 1119 (Ill. 2000),

the plaintiff charged the HMO with institutional negli-

gence for negligently assigning the doctor as the child’s

primary care physician while he was serving an over-

loaded patient population. The court decided that the

HMO owed a duty to refrain from assigning an excessive

number of patients to the contract primary care physician.

The court noted: “Public policy would not be well served by

allowing HMOs to assign an excessive number of patients

to a primary care physician and then wash their hands of

the matter.” Jd. at 1134. Further, the court recognized that

“.. HMO accountability is needed to counterbalance the

HMO goal of cost containment and, where applicable, the

inherent drive of an HMO to achieve profits.” Jd.

The second case, Thomas W. Self, M.D. v. Children’s

Associated Medical Group (695870) litigated in San Diego

County Superior Court in 1998, also illustrates the

22

problems that can occur in “high volume — low cost”

medical Practice. Kathy Kinsey, Settlement Helps Patch

Up Physician’s Firing, Verdicts & Settlements Supplement

to the Los Angeles Daily Journal, 1, 4, 8 (June 26, 1998).

In his lawsuit for wrongful termination from a medi-

cal group that had a large HMO practice, Dr. Thomas Self

alleged that he was terminated because he was spending

too much time with his patients. Jd. at 1. A jury awarded

$1.75 million in compensatory damages. Jd. at 4. Dr. Self

was the first doctor to win a case under the California law

that prohibits retaliation against doctors for advocating

appropriate patient care. Jd. Spending adequate time with

a patient is one example of appropriate patient care that is

difficult to do in a high volume practice. Dr. Linda Daniels,

chairwoman of the San Diego Medical Society’s bioethics

committee, stated: “Where health plans are saying you

(the doctor) must see six to eight patients an hour, they

are setting up a situation where you just can’t practice

good medicine. Good medicine requires good communica-

tion, as well as merely doing an exam or checking a blood

pressure. ... In (just a few) minutes, how in the world are

you going to get to know the patient?” Julie Marquis,

Verdict for Doctor in HMO Case Hits Nerve, Los Angeles

Times, Al, A24 (April 15, 1998). In October of 1999, the

Journal of Health Politics, Policy and Law published a

special issue, The Managed Care Backlash. It was noted

that one of the reasons for this “backlash” was the wide-

spread public concerns about the effect of managed care on

quality and access to care. Mark A. Peterson, Introduction:

Politics, Misperception, or Apropos?, 24 J. Health Pol.,

Poly. & Law 876 (1999). Certainly, the citizens of

Kentucky, through their legislature, are able to allay these

concerns by enacting an AWP law. These examples support

the logic that Kentucky has a legitimate interest in

23

regulating health insurers that are involved in determin-

ing the number of physicians who will practice medicine in

a given network.

The Petitioner’s argument could create the incongru-

ous situation that a state can mandate nurse-to-patient

ratios at hospitals but cannot pass AWP statutes to

achieve the goal of increasing the doctor-to-patient ratio by

trying to provide for a greater number of doctors in MCO

panels. California has passed a “Safe Staffing Law”

pertaining to hospital nurse-to-patient ratio requirements

because of concerns that “ ... quality of patient care is

jeopardized because of staffing changes implemented in

response to managed care.” 30 J. Law, Med & Ethics 312

(2002); See Linda H. Aiken, et al., Hospital Nurse Staffing

and Patient Mortality, Nurse Burnout, and Job Dissatis-

faction, 288(16) J.A.M.A. 1987 (2002). There have been

recent reports of patient deaths being linked to nursing

shortages, i.e. high patient-to-nurse ratios. Dr. Dennis S.

O'Leary, President of the Joint Commission on Accredita-

tion of Healthcare Organizations, stated: “We knew that

some unanticipated deaths and permanent loss of function

were related to inadequate numbers of nurses, but 24

percent surprised everybody.” Shery] Gay Stolberg, Patient

Deaths Tied to Lack of Nurses, N.Y. Times, A-18 (August 8,

2002). Although there is no evidence in the record of this

case that restrictive physician panels have resulted in

patient deaths, ACLM does not believe that Congress

intended ERISA to proscribe state laws regulating the

supply of doctors while allowing state laws to regulate the

supply of nurses.

Opponents of AWP statutes could argue that smaller

panels of doctors allow those in the panel to receive more

training and experience so as to maintain and improve

24

their expertise. However, in one case a woman who devel-

oped liver cancer was denied coverage to see a surgeon out

of network who specialized in liver cancer surgery. In-

stead, the MCO referred the patient to surgeons who had

never performed the specialized surgery and the patient

died while fighting the MCO’s decision. Elisabeth Rosen-

thal, Complications In Care - A Special Report: Patients

With Difficult Illnesses Fight New HMO’s To Get Help, N.Y.

Times Al (July 15, 1996). In another case, a patient's

parents were forced to go outside the MCO network after

the MCO referred her to a surgeon with no experience in

treating the type of kidney cancer she had. Commissioner

of Corps. of Cal. v. TakeCare Health Plan, Inc., No. 933-

0290 (Cal. Dep’t of Corps. Oct. 11, 1996). The AWP statute

makes it more likely that an insurer’s panel would include

certain doctors with unique skills and expertise.

Further, even though the Petitioners claim AWP laws

infringe upon an MCO’s ability to control the quality of the

providers, this claim has been refuted. Most MCO’s use

indirect measures of quality and efficiency, instead of

using stringent, objective performance criteria. Robert J.

Shouldice, Introduction to Managed Care 74 (1991). “But if

there were an objectively correct method, every plan

should include (or exclude) the same providers. Obviously,

the managers of different plans disagree, and none will

admit being wrong.” Joseph White, Choice, Trust, and Two

Models of Quality, 24 J. Health Pol., Poly. & Law 996

(1999). The fact that a preferred panel is not assembled

based on objective quality measures is a legitimate reason

for Kentucky to enact an AWP law, so that consumers are

free to make their own judgments about the relative

quality of providers.

25

Thus, the scheme of directing high volumes of patients

to limited numbers of doctors in an effort to lower the cost

of care and maximize the MCO’s profit is subject to state

regulation such as the AWP statute because it involves the

practice of medicine.

B. Kentucky has a legitimate interest under

its police powers in regulating the conti-

nuity of care that its citizens receive from

their doctors.

“The doctor/patient relationship is an important and

special relationship, vital to the provision of health care. It

develops over time, by a doctor learning a patient's history

and exercising professional judgment in not only evaluat-

ing a patient’s complaints, but in developing a specific

strategy for treating a patient’s ailments. Consequently, an

individual’s choice of doctor is of great importance.”

Humana Medical Plan, Inc. v. Ira S. Jacobson, M.D., 614

S.2d 520, 522 (Fla. App. 3rd Dist. 1992). Moreover, “when

an ailing person selects a physician to treat him, he does

so with the full expectation that such physician will do his

best to restore him to health, and the contract into which

they enter is deserving of more attention from the law

than a businessman’s expectation of profit from a purely

commercial transaction.” Hammonds v. Aetna Casualty &

Surety Co., 237 F. Supp. 96, 101 (N.D. Ohio 1965).

Patients may change health insurers for a variety of

reasons and this may jeopardize the continuity of care,

which is important to quality health care. Ezekiel J.

Emanuel and Nancy Neveloff Dubler, Preserving the

Physician-Patient Relationship in the Era of Managed

Care, 273 J.A.M.A. 323, 327 (1995). The patient's subse-

quent health insurer may provide a restricted panel of

26

doctors, which does not include the patient’s original

physician, thus fostering discontinuity of care. ACLM

submits that patients will more likely retain their doctor

of choice under Kentucky's AWP statute if the patient’s

health insurer changes.

Continuity of care (being under the care of the same

physician for health needs) is fundamental to t= doctor-

patient relationship and has a direct nexus to the practice

of medicine. The cornerstone of the practice of medicine is

the doctor-patient relationship because doctors cannot

practice medicine without patients. See David Orentlicher,

Health Care Reform and the Patient-Physician Relation-

ship, 5 Health Matrix Journal of Law Medicine 141, 143

(Winter 1995).

Maintaining continuity of care with their usual

physician is important to many patients. Margaret M.

Love and Arch G. Mainous III, Commitment to a Regular

Physician: How Long Will Patients Wait to See Their Own

Physician for Acute Iliness?, 48 The Journal of Family

Practice 202 (1999). “Forced disruption of continuity of

care is detrimental to patient receipt of primary care, and

is a potential negative consequence of annual bidding for

managed care contracts.” Susan A. Flocke, The Impact of

Insurance Type and Forced Discontinuity on the Delivery of

Primary Care, 45 The Journal of Family Practice 129, 133-

134 (1997).

MCO restrictions on physicians who are qualified and

willing to meet the terms and conditions of the MCO

interfere with the bond between patients and their doc-

tors. Ezekiel J. Emanuel and Nancy Dubler, Preserving the

Physician-Patient Relationship in the Era of Managed

27

Care, 273 J.A.M.A. 323, 327 (1995). The selective contract-

ing scheme that the Petitioners advocate and the Com-

monwealth of Kentucky has reformed may lead to patient

dissatisfaction. Christopher B. Forrest, et al., Managed

Care, Primary Care, and the Patient-practitioner Relation-

ship, 17(4) Journal of General Internal Medicine 270

(2002). Indeed, Jeff Goldsmith, a University of Virginia

associate professor and health care industry consultant,

spoke at a session on health care in Louisville, Kentucky

on August 21, 2002 sponsored by Humana, Inc., the parent

company of two of the Petitioners. Patrick Howington,

Rising Costs Means Health-Insurance Change, Courier-

Journal, Bl (August 23, 2002). Goldsmith stated that

consumers demand health plans with a wide choice of

providers. Jd. Furthermore, changes in health care sys-

tems that promote discontinuity (such as when an em-

ployer switches to a plan that a patient’s qualified

physician cannot join) can be particularly disruptive for

patients with chronic diseases, especially asthma. Marga-

ret Love, et al., Continuity of Care and the Physician-

Patient Relationship, 49 The Journal of Family Practice

998, 1004 (2000).

Indubitably, continuity of care is associated with a

higher level of trust between patient and physician.

Audiey C. Kao, et al., Patients’ Trust In Their Physicians,

13 Journal General Internal Medicine 681, 685 (1998) and

thus the doctor-patient relationship has been deseribed as

a moral covenant between physician and patient. Mark O.

Hiepler and Brian C. Dunn, Irreconcilable Differences:

Why The Doctor-Patient Relationship Is Disintegrating At

The Hands Of Health Maintenance Organizations And

Wall Street, 25 Pepperdine L. Rev. 597 (1998). There has

been widespread agreement that trust between patient

28

and physician is important for high-quality health care.

Arch G. Mainous III, et al., Continuity of Care and Trust

in One’s Physician: Evidence from Primary Care in the

United States and the United Kingdom, 33 Family Medi-

cine 22, 27 (2001).

Forced discontinuity caused by insurance changes not

only has an impact on patients’ quality of care, but can

also lead to extra visits and hidden costs. George E.

Kikano, et al., ‘My Insurance Changed’: The Negative _

Effects of Forced Discontinuity of Care, Family Practice

Management, http://www.aafp.org/fpm/20001100/44myin.

html. Preliminary studies suggested that long-standing

doctor-patient ties foster less expensive, less intensive

medical care. Linda J. Weiss and Jan Blustein, Faithful

Patients: The Effect of Long-Term Physician-Patient

Relationships on the Costs and Use of Health Care by

Older Americans, 86 American Journal of Public Health

1742 (1996). Additionally, continuity has been associated

with a lower likelihood of future hospitalization, which

would lower the cost of care for the MCO. James M. Gill

and Arch G. Mainous III, The Role of Provider Continuity

in Preventing Hospitalizations, 7 Archives of Family

Medicine 352, 357 (1998).

Hence, continuity of care is directly linked to the

practice of medicine, which Kentucky has the power to

regulate. When a patient is forced to a different health

insurer that the patient's qualified physician cannot be a

part of, even though that physician is willing to meet the

terms and conditions of the health insurer, then Kentucky

has a legitimate interest in addressing this discontinuity

SS ee —

29

of care. The AWP statute is a legitimate way for the state

to do so.

¢

CONCLUSION

At the end of the day, it should be noted that equally

important to the legal analysis which this Court will

undertake before arriving at a decision will be application

of the analysis, pragmatically, on consumers as patients

who seek and who are provided health care and treatment

in today’s era of health care delivery. Though the tentacles

of managed care are embedded within such delivery, the

sine qua non for quality and timely delivery is not consis-

tent with the views advocated by Petitioners. This case

presents, then, yet another foray before this Court (see

Rush Prudential) to subvert a state’s attempt to provide

its citizenry with a process that promotes quality, timely

and adequate health care. This amicus has demonstrated

that any willing provider statutes are a mechanism to

promote quality medical care by maximizing the number

of health care practitioners available to patients within

the Commonwealth of Kentucky.

Consequently, Kentucky's AWP statute does not have

a relation with ERISA sufficient to invoke preemption; but

even if there is a nexus between these state and federal

laws here giving birth to preemption, the AWP statute at

issue is saved from ERISA’s preemptive reach because it

(AWP) regulates the business of insurance by regulating

the practice of medicine.

WHEREFORE, for all the foregoing reasons, amicus

curiae, the American College of Legal Medicine, urges this

30

Court affirm the judgment rendered by the Sixth Circuit

Court of Appeals.

Respectfully submitted,

MILES J. ZAREMSKI, Esq.

KAMENSKY & RUBENSTEIN

Suite 200

7250 North Cicero Ave

Lincolnwood, Illinois 60712-1693

847-982-1776

Counsel of Record

GARY BIRNBAUM, M.D., Esq.

CASE WESTERN RESERVE UNIVERSITY

SCHOOL OF LAW

11075 East Blvd.

Cleveland, Ohio 44106-7148

216-368-3600

BRUCE A. BRIGHTWELL, Esq.

730 W. Main St., Suite 200

Louisville, Kentucky 40202

502-589-6190