Amicus Curiae Brief — Aetna Health Inc. v. Davila

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Nos. 02-1845 and 03-63

In The OFF! Ls K |

Supreme Court of ‘the Unitek Sater ——

ari a rane,

’

AETNA HEALTH on. FKA AETNA

U.S. HEALTHCARE INC. AND AETNA

U.S. HEALTHCARE OF NORTH TEXAS INC.,

Petitioner,

v.

JUAN DAVILA,

Respondent.

CIGNA HEALTHCARE OF TEXAS, INC.,

DBA CIGNA CORPORATION,

Petitioner,

v.

RUBY R. CALAD, ET AL.,

Respondent.

¢

On Writs Of Certiorari To The United States

Court Of Appeals For The Fifth Circuit

¢

BRIEF FOR AMICUS CURIAE SENATORS

EDWARD M. KENNEDY, JOHN McCAIN,

BOB GRAHAM AND REPRESENTATIVES

JOHN D. DINGELL, CHARLIE NORWOOD,

GEORGE MILLER, AND CHARLES B. RANGEL

IN SUPPORT OF RESPONDENTS

[Additional Members Of The House Of

Representatives Listed On Inside Cover]

¢

MILES J. ZAREMSKI, ESQ. MICHELE VARNHAGEN, ESQ.

Counsel of Record Democratic Labor Counsel

KAMENSKY & RUBINSTEIN U.S. HOUSE OF

7250 North Cicero Avenue REPRESENTATIVES

Lincolnwood, Illinois Committee on Education

60712-1693 and the Workforce

(847) 982-1776 2101 Rayburn House

Office Building

Washington, D.C. 20515

(202) 226-1881

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

OR CALL COLLECT (402) 342-2831

+

REPRESENTATIVES

THOMAS H. ALLEN, ROBERT E. ANDREWS,

SHELLEY BERKLEY, HOWARD L. BERMAN,

SHERROD BROWN, DONNA M. CHRISTENSEN,

WM. LACY CLAY, DANNY K. DAVIS, ROSA L.

DeLAURO, BARNEY FRANK, GENE GREEN,

RAUL M. GRIJALVA, RUBEN HINOJOSA,

JOSEPH M. HOEFFEL, SHEILA JACKSON-LEE,

STEPHANIE TUBBS JONES, DALE E. KILDEE,

CAROLYN C. KILPATRICK, JERRY KLECZKA,

JIM McDERMOTT, MAJOR R. OWENS,

FRANK PALLONE JR., CIRO D. RODRIGUEZ,

MAX SANDLIN, JANICE D. SCHAKOWSKY,

HILDA L. SOLIS, JOHN M. SPRATT JR.,

PETE STARK, JOHN F. TIERNEY,

MAXINE WATERS, HENRY A. WAXMAN

AND LYNN C. WOOLSEY

*

QUESTION PRESENTED

Whether ERISA is intended to preempt malpractice

jurisprudence, provided by state law when an HMO entity,

acting through one or more of those in its employ or on its

behalf, denies a request for care and treatment as not

medically necessary where the denial results from medical

decision-making based upon the exercise of discretionary

judgment.

‘

TABLE OF CONTENTS

Page

QUESTION PREGEITED .......0.<0:00ccceccesserecsersoressesese i

I e vecccccccnianseccernsnninpiaiciiiiinas ii

TABLE OF AUTHORITIES .........0:-00:seccsecceescsessseessess iv

INTEREST OF AMICI CURIAE..............00-000e0e00ee0e00s 1

SUMMARY OF ARGUMENT..............-:c-cccceeeceeeeeeeeees 2

III... .crrnnunscnsctnnsnsancsnsasinaaaisiioeiinaicnisitiisiaiaiad 3

I. ERISA WAS ENACTED TO PROTECT

PARTICIPANTS AND _ BENEFICIARIES

ELIGIBLE UNDER EMPLOYEE BENEFIT

II. ERISA CONTAINS A COMPREHENSIVE

SCHEME OF RIGHTS AND RESPONSI-

BILITIES FOR PENSION PLANS, BUT

NOT FOR HEALTH PLANS AND OTHER

TYPES OF EMPLOYEE BENEFITS ............. 5

III. CONGRESS INTENDED TO REGULATE

HEALTH CARE THROUGH LEGISLATION

OTHER THAN ERISA............. pesvesssesosanssoumse 9

IV. THERE IS NO LEGISLATIVE HISTORY IN

ERISA OR THE HMO ACT THAT CON-

GRESS INTENDED TO PREEMPT STATE

HEALTH CARE REGULATION OR MEDI-

CAL MALPRACTICE LAWS. ..................:.20006 12

ill

TABLE OF CONTENTS - Continued

Page

V. THE CONGRESSIONAL DEBATE OVER

THE PATIENTS’ BILL OF RIGHTS AND

SIMILAR LEGISLATION DEMONSTRATES

CONGRESS’ INTENT TO RETAIN STATE

HEALTHCARE REGULATION AND PRO-

VIDE MEANINGFUL STANDARDS AND

REMEDIES FOR MEDICAL TREATMENT

DEBCRIBO SGI. ....ccccccccccccccccccsccccccccssccccscsccssecesses 15

A. Legislative Efforts..................::cccccseseeeeeees 15

B. Congressional Intent Over Healthcare

Cannot Be Derived From a.Preemption

RAEI 2eccccctcccececesescccssescessssssnssssssssesenses 20

C. Legislative Efforts are a Beacon for the

TID... cccsncctcinemesiaindiaionimimeionsminimandts 23

VI. CONGRESSIONAL REPORTS DEMON-

STRATE THAT STATE LIABILITY DOES

NOT SIGNIFICANTLY AFFECT EMPLOYER

iv

TABLE OF AUTHORITIES

Page

CASES:

Federal

Dukes v. U.S. Healthcare, Inc., 57 F.3d 350 (3d Cir.

Og 10

Ingersoll-Rand Co. v. McClendon, 498 US. 133

(1990).......e.sceecsesesessnsensecsneennessneenneennecnnecssncssnssnsssnsnssssnses 12

Metropolitan Life v. Taylor, 481 U.S. 58 (1987) .......... 20, 21

New York State Conference of Blue Cross & Blue

Shield Plans v. Travelers Insurance Co., 514 US.

oD 5,6, 12

Pegram v. Herdrich, 530 U.S. 211 (2000)................ 7, 15, 19

Pilot Life Insurance Co. v. Dedeaux, 481 U.S. 41

ee passim

STATUTES:

PL. No. 93-222, 87 Stat. 914 (1973) ..........ccccccceeeeeeeeeeeeeeees 10

0 OQ 10

DD 6

DD 4

BD GRAD. 6 BOGE caccccccccsesctssessecssessseseccersssssssssessenssssnassoses 9

BD CLG. 6 BOBIIBID ccccecosccscsnscssensscssssccessssersssesnsscesssssnsnscase 7

, vt Ce DO 6

I 7

ND, 6

BD UDG. BB BOGE - BOG ncccccccccccscccccccssscsvecccscsccccssscssssssesseses 6

29 U.S.C. $$ 1101-1114.......................ccccccreeeceseccereessessesssoess 7

ee ee ee ee Le a a eT Pr eae ee See ae a ae a a a en

v

TABLE OF AUTHORITIES -— Continued

Page

OE

UE) )) 8

Ue 14

ADMINISTRATIVE MATERIALS:

120 Cong. Rec. 29,192 (1974).........scccssesseseeseesesensennenenens 4,8

120 Cong. Rec. 29,197 (1974)..........csscsseseseseesesenseeeeenennees 13

120 Cong. Rec. 29,928 (1974)..........cccsscssseseseeceesenreenneneees 5,8

120 Cong. Rec. 29,931 (1974).........csssscesesseerssecereesneeeneeens 13

120 Cong. Rec. 29,933 (1974).........-sess-ssessessesneenesseenenes 3, 5,9

120 Cong. Rec. 29,949 (1974).........ssscsceseseeseseeeesenseenenenees 15

Estimates of Federal Tax Expenditures for Fiscal

Years 2004-2008, United States Committee on

Taxation, Rept. JCS-8-03, 108th Cong. 1st Sess.

RS NE A eA RAEN 24

H.R. Conf. Rep. No. 1280, 93d Cong., 2nd Sess.

ET DETAR ALLO AM EERE ES Ae. 8

ELR. 1, 93d Cong., Ist Sess. (1973)........-.c:ssessesssesseseneeeneeens 6

HLR. 33, 93d Cong., Ist Sess. (1973)........c-ccccssssssssssssssssssee 6

ELR. 596, 108th Cong., Ist Sess. (2003) ..........--s:ssseesseeenes 19

ELR. 597, 108th Cong., Ist Sess. (2003) .........-..:sssessseeessees 19

H.R. 1415, 105th Cong. Ist Sess. (1999) .........--.e-ss+0+: 16, 17

ELR. 1602, 102nd Cong., 1st Sess. (1991).........--se:ssessseeeees 16

ELR. 1881, 103rd Cong., Ist Sess. (1993) .........-.e:-seesseees0es 16

TLR. 2563, 107th Cong., Ist Sess. (2001)............-s0-00++- 18, 19

vi

TABLE OF AUTHORITIES -— Continued

Page

H.R. 2723, 106th Cong., 1st Sess. (1999)..............::00+ 17, 18

H.R. 3605, 105th Cong., lst Sess. (1997)...............:0000 16, 17

H.R. 4577, 106th Cong., 2nd Sess. (2000) ...........::.:seeeeeeees 18

S. Amdt. 3694, 106th Cong., 2nd Sess. (2000)................... 18

S. 10, 108th Cong., 1st Sess. (2003).............ccccceeeeeeeeeeeeeeees 19

S. 1052, 107th Cong., 1st Sess. (2001).............:cccceeeees 18, 19

S. 1344, 106th Cong., 1st Sess. (1999)...........:ccccccceeeeeeeeeees 17

S. 1422, 93d Cong., Ist Sess. (1973) ............ccceeeeeeeeeeeeeerenees 6

S. 1890, 105th Cong., Ist Sess. (1970).............:2:cceeeeee 16, 17

S. 1945, 108th Cong., Ist Sess. (2003)...............cccceeeeeeeeeens 19

S. Rep. No. 129, 93d Cong., 1st Sess. (1973) ............... 10, 11

Legislative History of ERISA, 95th Cong., 2d Sess.

at 5282-5284 (1977), Subcomm. On Labor of

Comm. On Labor and Public Welfare....................... 13, 14

OTHER MATERIALS:

Congressional Budget Office Cost Estimate on S.

1052 — Bipartisan Patients’ Bill of Rights Act,

Telly BB, BOOA ..0cccescvescceescccescccssccocsscosossenssssccssossoeseosooonsoss 26

Limiting Tort Liability for ‘Medical Malpractice,

ECONOMIC AND BUDGET ISSUE BRIEF,

Congressional Budget Office (January 8, 2004)............ 26

Localio, R.A, et al., Relation Between Malpractice

Claims and Adverse Effects Due to Negligence,

325 NEW ENGL. J. MED. (No. 4 (July 25, 1991))........ 25

a ee a oe ed —_ -

Vii

TABLE OF AUTHORITIES — Continued

Medical Malpractice: Implications of Rising Premi-

ums on Access to Health Care, United States

General Accounting Office, GAO-03-836 (August

Medical Malpractice Insurance: Multiple Factors

Have Contributed to Increased Insurance Rates,

United States General Accounting Office, GAO-

CE Goa Br Bip cccccccveccvcssecenessnvnsescssnsenessccsvscseseess 26

Morreim, HOLDING HEALTH CARE ACCOUNT- :

ABLE (Oxford Univ. Press (2001))..............cccccceceseeeeeeees 10

Rosenblatt Law and Rosenbaum, LAW AND THE

AMERICAN HEALTHCARE SYSTEM (Founda-

[‘. 7). 0, Se ninnseiaiainiienineanss 13

Zaremski, Liability of Managed Care Organiza-

tions, LEGAL MEDICINE - Sixth Edition (ch.

ie ccccecccsnccecsesensssnscnvenescusenevesensecsssesenssccsnnimeveseunecs 10

oer

1

INTEREST OF AMICI CURIAE'

Amici United States Senators and Representatives

are primarily members of Congress who were serving in

Congress at the time of the adoption of the Employee

Retirement Income Security Act (hereinafter “ERISA” or

“the Act”) and the Health Maintenance Organization Act

(hereinafter “HMO Act”), serve on committees of jurisdic-

tion over ERISA or health care, and/or have sponsored

Patients’ Bill of Rights legislation to provide a federal and

state system of guaranteed rights and responsibilities to

the over 200 million American workers and their families

who are covered by ERISA health plans or other health

insurance.

Amici have a strong interest in providing the Court

with information regarding Congress’ intent at the time of

enactment of ERISA and thereafter. Recent legislative

debate over enactment of a federal Patients’ Bill of Rights

was expressly focused on the issue of meaningful causes of

action and redress under ERISA as well as traditional

state jurisdiction over health care and torts. Although

Congress has yet to enact a federal Patients’ Bill of Rights,

an overwhelming majority of the members of Congress, on

a bipartisan basis, have supported the principle that state

standards which bring into focus accountability by those

' Petitioners and Respondents have consented to the filing of this

brief in letters filed with the clerk. No counsel for a party authored this

brief in whole or in part. Members of Congress made a monetary

contribution to the printing of this brief.

whose judgments decide what is medically necessary care

and treatment on an on-going basis must not be altered by

federal law. Amici also do not believe that ERISA intended

to displace state malpractice laws, and do not believe such

laws conflict with the purposes or structure of ERISA.

¢

SUMMARY OF THE ARGUMENT

During legislative development and consideration of

ERISA, Congress was predominantly focused on establish-

ing minimum standards to protect the pension promises

made to millions of workers and their families. Congress

did not intend for ERISA’s pension standards to be inter-

preted by the courts as preempting state health care laws.

Congress intended to regulate health care through legisla-

tion other than ERISA. Although ERISA was amended in

conference to expand its provision on preemption of state

laws, Congress had no intention of preempting a wide

swath of state laws such as state health care laws or

malpractice laws. There is no legislative history in ERISA,

the HMO Act, or any other laws that indicate that Con-

gress intended to preempt state health care regulation or

malpractice laws. During recent consideration of legisla-

tion to enact a Patients’ Bill of Rights, a bipartisan major-

ity of Congress has indicated its intention to establish

minimum health insurance patient protection standards

apart from ERISA and to make clear that insurers and

health maintenance organizations should be accountable

for their discretionary medical decisions, including mixed

eligibility and treatment decisions, under state law. Such

3

legislative efforts are not the result of any need to reform

what was primarily a pension bill — but are the result of

an accumulation of court decisions which have incorrectly

construed ERISA as providing a shield for medical deci-

sion-makers.

+

ARGUMENT

I.

ERISA WAS ENACTED TO PROTECT

PARTICIPANTS AND BENEFICIARIES ELIGIBLE

UNDER EMPLOYEE BENEFIT PLANS

At its core, ERISA was designed to provide basic

minimum rights to workers regarding their pension plans.

The Act was the result of almost 10 years of legislative

consideration by the Congress. The impetus for the bill

was a series of bankruptcies by a number of employers.

Under these bankruptcies, tens of thousands of older

workers lost their jobs and could not retire with their

pensions. While their employers had promised pensions to

these workers, they had failed to fund the pension plans.

In light of this crisis, the debate in Congress focused on

developing a system for requiring employers to vest long-

service employees with -promised benefits and fund pen-

sion plans over a reasonable period of time. The debate

was an urgent one. At the time, of the tens of thousands of

pension plans then in existence, fewer than 20% were

funded. See 120 Cong. Rec. 29,933 et seq. (1974) (state-

ment of Sen. Javits (R-NY)).

On September 2, 1974, thirty years ago this year,

Congress enacted ERISA. The Congressional Findings and

4

Declaration of Policy of the Act lay out the legislation’s

purposes and goals:

The Congress finds that the growth in size, scope

and numbers of employee benefit plans in recent

years has been rapid and substantial, that the

operational scope and economic impact of such

plans is increasingly interstate, that the contin-

ued well-being and security of millions of em-

ployees and their dependents are directly

affected by these plans ... and it is therefore de-

sirable in the interests of employees and their

beneficiaries, for the protection of the revenue of

the United States, and to provide for the free

flow of commerce, that minimum standards be

provided assuring the equitable character of such

plans and their financial soundness.

29 U.S.C. § 1001(a) (2003) (emphasis added). What Con-

gress meant by these “minimum standards” becomes clear

with an examination of the Act’s legislative history.

The legislative history demonstrates a clear congres-

sional intent for ERISA to provide basic rights to working

men and women as pension plan participants and benefi-

ciaries. Congress’ focus was on creating minimum stan-

dards by which the pension plan promises of employers

would be measured and enforced. During House floor

debate on ERISA, Rep. Perkins (D-KY), a lead cosponsor of

the bill, explained the legislation’s purpose: “We have basic

minimum pension rights written into this bill which

should have been enacted many, many years ago to protect

the rights of working people.” 120 Cong. Rec. 29,192 (1974)

(statement of Rep. Perkins) (emphasis added). The Senate

debate contains similar statements. Senator Williams (D-

NJ), one of the bill sponsors, opened his floor statement by

stating, “... I am happy to report that after long and

5

numerous meetings of the conferees of HR 2, we are able

to bring before the Senate a conference agreement whicl:

has been unanimously adopted, and which, for the first

time, will safeguard the pension expectations of American

workers.” 120 Cong. Rec. 29,928 (1974) (statement of Sen.

Williams) (emphasis added). Senator Javits, the lead

sponsor of the Senate bill, highlighted that the bill “...

represents a series of fundamental guarantees made to

every American worker — guarantees that will secure for

millions of Americans the expectation of a decent retire-

ment income in combination with social security. These

guarantees are nothing less than a pension ‘bill of rights’ to

which every worker — regardless of his occupation, salary

or status — is entitled.” 120 Cong. Rec. 29,933 (1974)

(statement of Sen. Javits) (emphasis added).

In enacting ERISA, Congress believed it was provid-

ing a series of federal pension rights to workers and their

families. Its focus was entirely on establishing new mini-

mum protections, not eliminating a wide swath of long-

standing traditional state protections.

II.

ERISA CONTAINS A COMPREHENSIVE SCHEME

OF RIGHTS AND RESPONSIBILITIES FOR

PENSION PLANS, BUT NOT FOR HEALTH PLANS

AND OTHER TYPES OF EMPLOYEE BENEFITS.

As the Court has noted in several of its decisions,

ERISA contains a comprehensive system of rights and

responsibilities for certain types of employee benefit plans

— namely, pension plans. See, e.g., Pilot Life Insurance Co.

v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549, 95 L.Ed. 2d 39

(1987); New York State Conference of Blue Cross & Blue

6

Shield Plans v. Travelers Insurance Co., 514 U.S. 645, 115

S.Ct. 1671, 131 L.Ed. 2d 695 (1995). ERISA does not

provide such a comprehensive scheme for health plans and

other types of non-pension employee benefits.

In fact, its very title reveals its focus on retirement

and pensions. This pension focus was no accident. At the

time of enactment, adoption of a national health care

system appeared imminent. President Nixon had proposed

a national mandated employer-based system, and leading

Democrats supported a national government system. See

S. 1422, 93rd Cong., 1st Sess. (1973) (introduced by Sen.

Kennedy (D-MA)); H.R. 1 and H.R. 33, 93rd Cong., 1st

Sess. (1973) (introduced by Reps. Ullman (D-OR) and

Dingell (D-MI), respectively). In other words, while ERISA

presented a comprehensive scheme for regulating pension

plans, Congress had other efforts in mind for grappling

with the provision of health care — efforts which continue

to this day.

The pension focus is evident throughout the Act. The

main title of ERISA, Title I, contains the following five

parts: 1) reporting and disclosure, 2) participation and

vesting, 3) funding, 4) fiduciary responsibility, and 5)

administration and enforcement. 29 U.S.C. § 1001 et seq.

(2003). Each of these parts provides detailed rules to

which pension plans must comply. Pension plans must

annually file detailed financial disclosure forms with the

Internal Revenue Service. 29 U.S.C. §§ 1021-1031 (2003).

Pension plans must provide coverage to specific categories

of employees, vest their right to benefits after a specific

period of time, accrue benefits in specific form, and pay

benefits at specific times. 29 U.S.C. §§ 1051-1061 (2003).

Pension plans must comply with detailed rules for fund-

ing. 29 U.S.C. §§ 1081-1086 (2003). Employers must

7

adhere to a strict scheme of fiduciary responsibility for the

management of all pension fund monies. 29 U.S.C.

§§ 1101-1114 (2003). And participants, beneficiaries,

employers, plans and the Secretary of Labor have elabo-

rated rights and responsibilities to achieve compliance

with the Act. 29 U.S.C. §§ 1131-1147 (2003).

In contrast to this extensive regulatory scheme for

pension plans, non-pension benefit plans are only subject

to three of the five parts of ERISA Title I — reporting and

disclosure, fiduciary responsibility, and administration

and enforcement — and even then in abbreviated form. For

instance, welfare plans such as health insurance are

subject only to simplified reporting requirements, if any.

In a provision which plainly underscores Congress’ pen-

sion focus, the Act leaves it to the Secretary of Labor to

either exempt welfare benefit plans entirely from the

reporting and disclosure requirements of Title I or create

simplified reporting regulations for these non-pension

plans. 29 U.S.C. § 1024(a)(3) (2003). And as the Court has

noted, aspects of the fiduciary responsibility rules also

may be construed as inapplicable since the primary

functions of non-pension plan fiduciaries do not involve

discreticnary authority or control respecting management

of the plan or its assets. Pegram v. Herdrich, 530 U.S. 211,

231-232, 120 S.Ct. 2143, 2155-2156, 147 L.Ed. 2d 164, 182-

183 (2000); see also 29 U.S.C. § 1002(21) (2003) (ERISA’s

definition of a fiduciary).

Even ERISA’s causes of action primarily make sense

in the context of pension benefits. In a pension plan, an

employer promises to provide a retirement benefit to

certain employees upon reaching a specific age or termina-

tion of employment and based on a predetermined formula

or contribution rate. The situations in which a cause of

8

action might arise most likely include failure to pay

promised benefits, a dispute over the amount of benefits,

or allegations of abuse of promised funds. Each of these

causes of action neatly fits under ERISA’s multi-part

enforcement test. 29 1'.).C. § 1132(a) (2003). In contrast,

most health benefit disuutes center on whether requested

or received treatment was “medically necessary,” a concept

not defined by ERISA or subject to any ERISA standards.

Thus, although health plan payment procedures constitute

plan administration, accountability for the quality of

medical judgment historically has been a matter of state

law.

The legislative history also confirms Congress’ focus

on pensions. The Conference Report to ERISA opens by

stating that “[t]he committee of conference on the dis-

agreeing votes of the two Houses on the amendment of the

Senate to the bill (HR 2) to provide for pension reform,

having met, after full and free conference, have agreed to

recommend and do recommend to their respective Houses

as follows: ...” H.R. Conf. Rep. No. 1280, 93d Cong., 2d

Sess. 1 (1974) (emphasis added). The floor statement of

Rep. Perkins, a sponsor of the bill, stated “.. . to summa-

rize what is being done today let me state — after years of

study and investigation, hearings and debate, after end-

less hours of work, pension reform legislation of an historic

character is almost complete.” 120 Cong. Rec. 29,192

(1974) (statement of Rep. Perkins) (emphasis added).

As previously noted, the Senate debate contains

similar statements. Senator Williams, one of the bill

sponsors, explained that ERISA was “. . . the outgrowth of

a 3-year in-depth study of the private pension systerr .. .”

120 Cong. Rec. 29,928 (1974) (statement of Sen. Williams)

(emphasis added). Further, Senator Javits, the lead

sponsor of the Senate bill highlighted that “... [flor the

pension reform bill is the greatest development in the life

of the American worker since social security. For the first

time in our history most workers will be able truly to

retire at retirement age and to live decently on their Social

Security, and private pensions.” 120 Cong. Rec. 29,933

(1974) (statement of Sen. Javits) (emphasis added). In

other words, Senators and Representatives repeatedly

referred to ERISA as a pension reform bill — to the exclu-

sion of a health care reform bill or even a general em-

ployee benefits reform bill.

In fact, other than the definition of an employee

welfare benefit plan, at the time of enactment, the statute

and legislative history were effectively silent on regulation

of health care. See 29 U.S.C. § 1002(1) (2003) (ERISA’s

definition of a welfare benefit plan). As will be seen,

Congress intended ERISA to focus on the private pension

system while other legislation would deal with health care

reform. The enactment of ERISA should not be viewed in a

legislative vacuum — but in the context of surrounding

legislative activity.

III.

CONGRESS INTENDED TO REGULATE

HEALTH CARE THROUGH

LEGISLATION OTHER THAN ERISA.

The legislative history of ERISA is almost completely

silent on Congress’ intent with respect to health care

regulation and particularly on issues related to medical

treatment decisions, including accountability and liability

for harm arising from such decisions. In large part this

was due to the fact that Congress intended to regulate

10

health care through other legislation. And in the case of

the Health Maintenance Organization Act of 1973 (“HMO

Act”), enacted during the same Congress, it did so. Pub. L.

No. 93-222, 87 Stat. 914 (1973) (codified at 42 U.S.C.

§ 300e (2003)).

The managed care industry was in its infancy in the

early 1970s. Accordingly, there was no suggestion that

Congress should have considered the shield being asserted

to preempt state-based relief for HMO-related actions

today. State-based relief issues largely developed over the

last decade or so through court-made decisions. See e.z.,

Morreim, E.H., Special Issues in ERISA, HOLDING

HEALTH CARE ACCOUNTABLE at 268, n. 46 (Oxford

Univ. Press (2001)) (listing roughly 33 federal and state

cases); see also Zaremski, Liability of Managed Care

Organizations, LEGAL MEDICINE Ch. 36 (6th Ed.

(2004)). Employers generally contracted with health

insurance companies that paid on a retrospective basis for

covered care. State-licensed health care providers provided

treatment under state standards of medical care. See, e.g.,

Dukes v. U.S. Healthcare, Inc., 57 F.3d 350 (3d Cir. 1995).

The HMO Act was enacted to provide federal support

for the development of HMOs. This law contains a series of

provisions which define HMOs and their elements —

including covered benefits, assumption of risk, accessibil-

ity of services, health care personnel, and consumer role —

authorize funding for their development, and create a

Commission on Quality Health Care Assurance. 42 U.S.C.

§ 300e et seq. (2003). The main legislative history for the

HMO Act is contained in the Senate Report by the Com-

mittee on Labor and Public Welfare. S. Rep-No. 129, 93rd

Cong., Ist Sess. (1972). The report contains a section on

“Preemption of State Law.” Jd. at 26-27. Nowhere is there

11

any discussion of federalizing medical or mixed eligibility

and treatment decisions made by HMOs comparable to the

cases at hand. In the context of its discussion of establish-

ing a Commission on Quality Health Care Assurance, the

Committee stated, “[iJt is not the intent of the Committee

that the Commission engage in the setting of standards

for, or the regulation of, the practice of medicine.” Jd. at

43. The Committee also emphasized that there must be a

development of local mechanisms for monitoring and

improving the quality of health care services, both in and

out of health care assurance systems since local disease

patterns and treatment methodologies differ. Id. Addition-

ally, the report states, again in connection with a commis-

sion on quality health care, that states should be given the

opportunity to develop health care standards. Id. at 46.

One of the reasons was that experience in the medical field

indicated that the closer the responsibility for standards

development and health care regulation is to the actual

provider of care, the more likely the provider is to become

involved in the development and setting of standards. The

Committee concluded in this regard by saying, “(tJhe

concept of permitting the state [agencies] to develop their

own standards and to enforce them. . . is in keeping with

the overall philosophy of the Committee.” Id.

The HMO Act did not, and did not intend to, federalize

standards of medical care or the practice of medicine — the

foundation of which is to make medical decisions. Con-

gress has not undertaken passage of any legislation since

that time which would vary from the Senate report.

12

IV.

THERE IS NO LEGISLATIVE HISTORY IN

ERISA OR THE HMO ACT THAT CONGRESS

INTENDED TO PREEMPT STATE HEALTH CARE

REGULATION OR MEDICAL MALPRACTICE LAWS.

There is no legislative history for ERISA, the HMO

Act, or any other legislation that provides guidance to

suggest, as Petitioners seem to do in their briefs, that

Congress intended to shield health benefit plans or their

intermediaries from consequences arising from decisions

made by those administering the plans affecting the

medical care and treatment provided plan participants

and beneficiaries (including under the guise of making

payments for care or of a plan benefit determination).

Those seeking reversal of the court’s decisions below seek

to stake claim to the position that our silence meant we

wanted such a shield to arise in 1974. We failed to speak

in 1974 because it was never our intent to have ERISA

apply to issues as now before this Court.

As the Court has held, “(t]he question whether a

certain state action is pre-empted by federal law is one of

congressional intent” and on the “.. . assumption that the

historic police powers of the States were not to be super-

ceded by the Federal Act unless that was the clear and

manifest purpose of Congress.” Pilot Life Insurance Co. v.

Dedeaux, 481 U.S. 41, 45, 107 S.Ct. 1549, 1552, 95 L.Ed.

2d 39, 46 (1987); Ingersoll-Rand Co. v. McClendon, 498

U.S. 133, 137-38, 111 S.Ct. 478, 482-83, 112 L.Ed. 2d 474,

482-83 (1990); New York State Conference of Blue Cross &

Blue Shield Plans v. Travelers Insurance Co., 514 U.S. 645,

654-55, 115 S.Ct. 1671, 1676, 131 L.Ed.2d 695, 704-705

(1995) (citing previous Court rulings).

13

There is limited Congressional legislative history on

the intent of ERISA’s preemptiou provisions. Legislative

debate was focused on the bill’s funding and fiduciary

requirements. The House and Senate-passed versions of

ERISA only preempted state laws that covered subjects

regulated by ERISA. Subcomm. on Labor of Comm. on

Labor and Public Welfare, Legislative History of ERISA,

94th Cong., 2d Sess. 5282-84 (1977) [hereinafter Legisla-

tive History of ERISA). The preemption language was

broadened in conference largely due to concerns about

state efforts to prevent the expansion of pre-paid legal

service plans that were a perceived threat to the legal

profession. Rand E. Rosenblatt, Sylvia A. Law & Sara

Rosenbaum, LAW AND THE AMERICAN HEALTH CARE

SYSTEM 159-177 (Foundation Press 1997). There is no

evidence in the legislative history that Congress intended

to preempt traditional health care regulation, medical

malpractice, or similar laws.

Instead, Congress’ focus was on eliminating the threat

of state laws that conflicted with the substantive provi-

sions of ERISA regulation. During House floor debate on

ERISA, Representative Dent (D-PA), one of the lead House

sponsors noted: “With preemption of the field, we round

out the protection afforded participants by eliminating the

threat of conflicting and inconsistent state and local

regulation.” 120 Cong. Rec. 29,197 (1974) (statement of

Rep. Dent). Senator Williams echoed this explanation in

the Senate. He noted that ERISA’s preemption provisions

are intended to “. . . eliminate] the threat of conflicting or

inconsistent state and local regulation of employee benefit

plans.” 120 Cong. Rec. 29,931 (1974) (statement of Sen.

Williams). In the summary of differences between the

House and Senate versions of the pension reform bill, the

14

staff comment recommended that “... the conferees may

want to adopt the rules of the Senate bill, but not allow

suit under Title I to be brought in state court. (Suit

brought in state court could be based on breach of con-

tract, but suit could be removed, by either party, to federal

court in actions involving an interpretation of this Act.)”

Legislative History of ERISA 5276. Staff reiterated this

recommended interpretation in the section on preemption.

Id. at 5284. The legislative history demonstrates that

Congress intended to create certain new federal rights

exclusively subject to federal court. However, Congress

expected existing contract rights to remain subject to state

jurisprudence. Tort actions were not even mentioned.

Next, we do not see a material difference between

HMOs and physicians where state laws regulating medical

judgment quality are concerned. In the case of medical

necessity decisions, HMO and physician conduct are

identical, differing only in their point in time. They are

comparable individuals and entities when making medical

treatment decisions, just in different places in line. Peti-

tioners seek to create confusion by arguing that there is no

distinction between federal acts of plan administration

and the medical judgments that indirectly affect plan

administration. Let us show, by way of analogy, why there

is, indeed, a distinction — and a critical one. When a

pension plan contracts with an investment manager, the

manager clearly is still subject to federal and state securi-

ties ethics law since ERISA did not preempt federal or

state securities law. But, when a pension or health plan

contracts with a lawyer or accountant, does ERISA pre-

emption exempt them from state professional liability laws

since ERISA section 514(b), the savings clause, does not

specifically reference them? See 29 U.S.C. § 1144(b) (2003).

In fact, during Senate debate on ERISA, Senator Javits

15

assured Senator Taft (R-OH) that ERISA’s preemption

provision was not intended to preempt state bar associa-

tions from enforcing ethical rules or disciplining members.

120 Cong. Rec. 29,949 (1974) (statement of Sen. Javits). If

the Court holds that state malpractice laws do not apply to

negligent acts by HMOs simply because they do business

with an ERISA plan, then a wide range of other actors also

must be exempt. Surely, this is not what the framers of

ERISA intended.

Consistent with this interpretation, the Court in

Pegram rejected reading a malpractice cause of action into

ERISA and assumed that state malpractice law continues

to govern medical judgment. Medical treatment decision-

making and improper processing of benefit claims are

different acts and concepts with some overlap as noted in

Pegram. Having closed the federal door, it is inconceivable

that the Court could also close the state door.

V.

THE CONGRESSIONAL DEBATE OVER

THE PATIENTS’ BILL OF RIGHTS AND

SIMILAR LEGISLATION DEMONSTRATES

CONGRESS’ INTENT TO RETAIN STATE

HEALTH CARE REGULATION AND PROVIDE

MEANINGFUL STANDARDS AND REMEDIES

FOR MEDICAL TREATMENT DECISIONS.

A. Legislative Efforts

In recent years, Congress has devoted extensive

legislative activity toward remedying weaknesses in the

current health insurance system by seeking to enact a

“Patients’ Bill of Rights,” but an effective measure has yet

to be signed into law. Patients’ Bill of Rights legislation

has included reforms addressed both to the types and form

16

of benefits that insurers must cover and for redress of

wrongful denials of benefits. We note in particular Aetna’s

assertion that in recent years Congress has adhered to the

principle that any damages remedy for eligibility determi-

nations under an ERISA plan should be exclusively federal

(Br. at 42, n. 23) (emphasis in original text). This is abso-

lutely wrong. Let us make the record of our actions clear.

Since the failure of the 103rd Congress to pass Presi-

dent Clinton’s proposed legislation to provide health care

for all Americans, there has been considerable effort by

Congress to develop minimum standards for health insur-

ers, including appropriate remedies for wrongful injuries

suffered by patients, ie., a “Patients’ Bill of Rights.”

{Legislation also had been introduced to overturn the

Court’s decision in Pilot Life, but was not enacted.) H.R.

1602, 102nd Cong., Ist Sess. (1991); H.R. 1881, 103rd

Cong., 1st Sess. (1993). In 1995, the President established

a national Advisory Commission on Consumer Rights and

Quality in Health Care. The Commission reported its

recommendations in 1997, and they were quickly intro-

duced in the House by Congressman Dingell as H.R. 3605

with 193 co-spoasors and in the Senate by Senator Tho-

mas Daschle (D-SD) as S. 1890 with 31 cosponsors. H.R.

3605, 105th Cong., Ist Sess. (1997); S. 1890, 105th Cong.,

lst Sess. (1997). These bills were jointly known as the

“Patients’ Bill of Rights.”

Concurrently, the “Patient Access to Responsible Care

Act” (H.R. 1415), sponsored by Congressman Charlie

Norwood (R-GA), was being considered in the House. This

legislation addressed many of the same issues as the

Patients’ Bill of Rights and was cosponsored, bipartisanly,

by 234 members of the House.

17

Congress was well aware of the confusion in the

courts on the issue of state laws and liability under ER-

ISA, and both H.R. 1415 (Sec. 4) and H.R. 3605/ S.1890

(Sec. 302) clarified that causes of action arising out of a

health insurer’s discretionary medical decision should be

considered in state courts. Both bills made clear that

ERISA did not preempt state causes of action. No action

was taken in the 105th Congress.

During the 106th Congress both the House and

Senate passed patient protection bills. The Senate’s

version (S.1344 sponsored by Senator Trent Lott (R-MS))

was less comprehensive and did not include a provision on

the liability of health insurers. S.1344, 106th Cong., 1st

Sess. (1999). The bill passed the Senate by a vote of 53-47.

The House bill, H.R. 2723, introduced by Reps. Norwood

and Dingell, was very similar to H.R. 1415 and H.R. 3605

from the 105th Congress. The legislation provided a

detailed set of patient care standards for health insurers,

including those contracting with employers, and contained

remedies. On October 7, 1999, the bill passed the House by

a vote of 275-151. The bill, in Section 302, provided that

ERISA would not preempt any cause of action under state

law to recover damages “resulting from personal injury or

for wrongful death in connection with . . . medical ser-

vices rendered by such person to or for a group health

plan” or that arose “out of the arrangement by such person

for the provision of . . . medical services.” H.R. 2723, 106th

Cong., lst Sess. § 302 (1999). Employers were exempted

from this section, except if such employer exercised “dis-

cretionary authority to make a decision on a claim for

benefits covered under the plan” and “the exercise by such

employer or other plan sponsor of such authority resulted

in personal injury or wrongful death” Jd. (emphasis

18

added). Two other amendments that were considered on

the floor included alternative provisions to the remedies

for patients in H.R. 2723. All but nine members of the

House present and voting that day voted for a provision

that would hold health insurers liable for making a medi-

cal treatment decision.

The House-Senate Conference Committee was not

able to reconcile differences during the 106th Congress.

However, it is important to note that in the second session

of the 106th Congress, the Senate did, for the first time,

pass language that held insurers liable for their discre-

tionary decisions. The amendment by Senator Don Nickles

(R-OK), S. Amdt. 3694 to H.R. 4577, passed by a vote of

51-47 on June 29, 2000.

The same scenario repeated itself in the 107th Con-

gress. In this Congress, numerous patient protection bills

were introduced, and two main bills passed. S. 1052 and

H.R. 2563. S. 1052 was introduced by Senators John

McCain (R-AZ), John Edwards (D-NC), and Edward

Kennedy (D-MA). On June 29, 2001, S. 1052 was passed in

the Senate by a vote of 59-36. Section 402 of the bill

provided for the availability of civil remedies and pre-

cluded preemption of any state cause of action predicated

upon the failure to “exercise ordinary care in making a

decision regarding whether an item or service is covered

under the terms and conditions of a plan or coverage” and

“such failure was a proximate cause of personal injury to,

or the death of, the participant or beneficiary.” S. 1052,

107th Cong., 1st Sess. § 402 (2001) (emphasis added).

Employers were exempted unless they participated in the

decision to deny a benefit causing injury. Jd.

19

H.R. 2563 was introduced by Reps. Greg Ganske (R-

IA) and John D. Dingell and passed the House by a vote of

226-203 on August 2, 2001. While HR 2563 contained

many of the same provisions as S. 1052, S. 1052 would

have permitted state law causes of action involving medi-

cally reviewable decisions and would have expanded

federal causes of action for benefit denials not based upon

medical decisions. S. 1052 §402. H.R. 2563 created a

federal cause of action that could be heard in state court

and subject to state law procedural rules. H.R. 2563, 107th

Cong., lst Sess. § 402 (2001). S. 1052 permitted non-

economic damages to be determined by state courts under

state law, and H.R. 2563 only permitted state law on

damages up to a federally established cap. S. 1052 § 402,

H.R. 2563 § 402. Both bills shielded employers and ERISA

plans from expanded liability unless the employer or plan

participated in the decision-making process. S. 1052 § 402,

H.R. 2563 § 402. However, an impasse arose over whether

federal limits should be imposed, not whether state law

should govern accountability.

Patients’ Bill of Rights legislation was again intro-

duced in the 108th Congress: H.R. 596 and H.R. 597 by

Congressman Norwood, S. 10 by Senator Daschle and S.

1945 by Senators McCain, Edwards and Kennedy. How-

ever, the lack of resolution over federal limits on state

damages and the emergence of consensus on the need for

Medicare coverage of prescription drugs have taken center

stage over Patients’ bill of rights legislation. Further,

members of Congress were well aware of the Court’s

decision in Pegram and many, ourselves included, were

optimistic that its findings and holding would be carried

through and expanded upon by the courts.

20

B. Congressional Intent Cannot be Derived from

a Preemption Analysis

As a critical side-note to our discussion here, we must

take issue with that which is put forth in the brief for the

United States. That brief claims: “‘Complete preemption’

reflects a Congressional intent for Section 502(a) to pro-

vide the exclusive remedies for claims that fall within the

scope of that section.” (U.S. Br. at 7). The government then

states: “But certain statutes so completely occupy an area

Congress has chosen to regulate exclusively as federal law,

with a federal cause of action, ‘... that any civil complaint

raising this select group of claims is necessarily federal in

character,” (citing to Metropolitan Life v. Taylor, 481 U.S.

58, 63-64 (1987)) (U.S. Br. at 10), that Pilot Life should be

interpreted to reflect our rejection of remedies under state

law [such as is at issue in the cases at bar] (Br. at 11), and

that somehow we have clearly manifested our intent to

have ERISA preempt state tort remedies for making

medical decisions from which harm is claimed to have

arisen. These claims do not pass muster, particularly in

light of the legislative histories examined herein.

The preceding pages make clear that we never in-

tended ERISA to preempt state-based remedies for harm

resulting from those making medical decisions based upon

discretionary judgment that do not meet medical stan-

dards of care. In other words, we have never intended

to preempt a state-based scheme for resolving

medical negligence claims. We recognize the sanctity of

the states to regulate health care and have never clearly

expressed a contrary intent by passing ERISA or other

legislation. Medical decisions of the type at issue here

were never even on our “radar screen” when we drafted

and passed ERISA.

21

While our emphasis in this brief is to assist this Court

with what we know best, our legislative efforts, we are

compelled to reference the fact patterns in Pilot Life and in

Taylor and offer an observation about analogizing them to

the fact patterns in the instant cases. We note both of the

cases pertained to disability benefits for back injuries. In

both cases, following the injuries, disability benefits were

paid, then terminated (in Pilot Life, benefits were also

reinstated, then terminated). The lynchpin in these two

cases was that payments were made; not that medical care

was requested prospectively as being medically necessary,

as in the instant two cases. To us, this prospective denial

of a medical benefit is not denying payment for disability

benefits (as this Court was confronted with in Pilot Life

and Taylor). Thus, extrapolation of the Court’s analysis of

our intent in crafting ERISA using the fact patterns in

those two cases would be inappropriate for the instant

matters. Indeed, a difference does exist between an HMO

entity providing care and treatment in this day and age of

healthcare delivery and traditional insurers of days past

making post-treatment coverage decisions to pay or not to

pay for treatment already given. See U.S. Br. at 15. If

treatment was already given and the only issue was

payment, then the medical decision-making process is

never implicated; only payment for care given in the past.

To put it another way, Ms. Calad needed to be hospi-

talized for more than one day; a decision was made to deny

this request; Ms. Calad, in other words, had not already

stayed hospitalized for more than for what her pre-

certification allowed and then asked to be reimbursed for

the expense of this additional time. If that were her issue,

then Pilot Life and Taylor might be useful precedent. So,

too, with Mr. Davila, if he had already received Vioxx but

22

Aetna would not pay for it following a request for pay-

ment, then payment, and solely payment, would replace

any medical decision-making prospectively made as the

central fact to be considered by this Court. To this extent,

then, we would find the government’s characterization of

the Davila and Calad fact patterns to be in error. U.S. Br.

at 14, 15 (“Specifically, Davila’s claim requires a showing

that Davila was entitled to payment for Vioxx. . . .” and, “If

Calad did not have a legal right under her ERISA plan to

payment... .”).

Parenthetically, this Court in Pilot Life referenced our

observations of the civil enforcement provisions in Sec.

502(a) of ERISA in the Conference Report (on ERISA) for

causes of action arising in federal courts in similar fashion

to those (suits) brought pursuant to Section 301 of the

Labor-Management Relations Act of 1947 (“LMRA”) (481

U.S. at 55). The Court went on to state that, when we

enacted ERISA, we were aware of the preemptive force of

LMRA’s Section 301 for violations of contracts between an

employer and a labor organizatian, 301’s preemption of

any ‘state-law claim whose resolution is substantially

dependent upon the analysis of the terms of an agreement

made between the parties in a labor contract’ [citation

omitted], and ERISA’s goal of bringing uniformity of [legal]

decision which it was designed to foster. Jd. The type of

decisions based on discretionary judgment on a forward-

looking basis made by petitioners in the cases at bar are

neither predicated on words of a contract, analysis of

terms of an agreement nor on processing a claim for care

already rendered and therefore not based on a claim for

inappropriately processing a claim for care given. For

these reasons, and for purposes here, any linkage of words

we put forth in the Conference Report on ERISA regarding

23

civil enforcement provisions of Section 502(a) and LMRA’s

Section 301 should not be persuasive in any judicial

analysis.

C. Legislative Efforts Are a Beacon for the Court

The importance of the legislative action regarding the

Patients’ Bill of Rights is clear. On several occasions both

chambers of Congress have passed patient protection

legislation that would provide for state court venue and

remedies for harm arising from discretionary decision-

making made by entities such as before the Court here. As

late as 2003 (see H.R. 5, § 13 at 26), there remains as well

a recognition that those health insuring entities should be

held liable when they make decisions as to the medical

necessity of care and treatment provided beneficiaries of

those entities.

There is another important aspect to what, in general,

Congress has done over the last four years concerning

remedies available to plan beneficiaries for their care and

treatment arising out of decisions based on discretionary

judgments. There should be but one venue to adjudicate

harm arising from medical treatment decisions — and it

should be the states and territories. To adopt a position by

Aetna and Cigna in these cases would mean that, even

though those entities administer health benefits and make

the same decisions as healthcare providers found in

doctors’ offices or in hospital corridors — whether mixed

eligibility and treatment or not — such entities would be

subject to the federal courts to adjudicate any harm

arising from their decisions, while doctors and hospitals

would be subject to state courts for making precisely the

same decisions. We do not countenance such duplication of

legal resources, have never envisioned this through our

24

legislative efforts in this arena, and are certain neither

would this Court. Again, as states have been charged with

policing health care, i.e., regulating the medical decision-

making process, so, too, states should remain the place of

adjudication for claims from harm arising therefrom. Such

judgments on treatment do not implicate ERISA’s focus on

uniform administration since these are not primarily

decisions about proper processing of benefit claims, but

decisions about appropriate delivery of medical care.

Furthermore, the suggestion has been advanced on

behalf of petitioners that our branch of government should

be the one to make more certain that which we passed

with our ERISA legislation rather than for this Court to

undertake it. While many occasions have existed in this

Court’s jurisprudence where such legislative action was

necessary, the facts giving rise to the instant cases do not

call for us to rethink what we did in 1974. We say this for

two reasons. First, the language of our act is not a result of

having consciously dealt in any way with accountability

for discretionary decision-making as to medically neces-

sary care and treatment provided participants and benefi-

ciaries of health plans. Nor is it the result of any prior

knowledge on our part of what HMOs did back in the early

1970s. A fortiori, we think it inappropriate for the Court to

suggest that we make revisions to ERISA to language that

never addressed the issues here in the first instance.

Second, our efforts to make clear what ERISA should

preempt or not preempt in the area of medical decision-

making was occasioned by the development of case law

over the last decade, providing interpretations of ERISA,

e.g. quality versus quantity of care, treatment versus

administrative decisions, and even the “mixed eligibil-

ity/treatment” decision. Because the issues raised in these

25

cases arise from court-made interpretations of language

we never enacted nor in any sense intended to enact, it

appears more appropriate for this Court to take the lead in

crafting a clear and distinct standard to be applied by

lower courts to fact patterns such as the two put forth in

these cases. It is easier for this Court to clarify its previous

interpretations of preemption by ERISA, than for Con-

gress to override employer and industry opposition and

restore what we never intended to take away in the first

instance.

~~

VI.

CONGRESSIONAL REPORTS DEMONSTRATE

THAT STATE LIABILITY DOES NOT

SIGNIFICANTLY AFFECT EMPLOYER

OR INSURER HEALTH CARE COSTS

Employers establish employee benefit plans because

their employees value them and they serve the employer’s

economic interests, as evidenced by over $200 billion in

annual tax deductions. U.S. Joint Committee on Taxation,

Estimates Of Federal Tax Expenditures For Fiscal Years

2004-2008, Rept. JCS-8-03, 108th Cong., 1st Sess. (2003).

Almost all large employers maintain a range of employee

benefit plans, and small employers offer some benefits as

soon as they are profitable enough to do so. Linked to this

are the studies which have found that approximately 1% of

the actual victims of malpractice bring a judicial action

and less than 50% of plaintiffs are successful. See e.g., A.

Russell Localio et al., Relation Between Malpractice

Claims and Adverse Effects Due to Negligence, NEW

ENGLAND JOURNAL OF MEDICINE, vol. 325, no. 4,

July 25, 1991. Moreover, the Congressional Budget Office

estimate on Patients’ Bill of Rights legislation found that

26

the effect of its liability provisions on health care costs

would be less than 1%. Congressional Budget Office Cost

Estimate on S. 1052, the Bipartisan Patients’ Bill of Rights

Act, July 20, 2001.

Further, recent reports by both the Congressional

Budget Office (CBO) and General Accounting Office (GAO)

have refuted employer and insurer claims of increased

costs from medical decision-making, accountability and

liability. The CBO has found that malpractice costs ac-

count for less than 2% of health care spending and claims

that limiting tort liability will reduce the practice of

“defensive medicine” are weak or inconclusive. Limiting

Tort Liability for Medical Malpractice, ECONOMIC AND

BUDGET ISSUE BRIEF, Congressional Budget Office at

1, January 8, 2004. The CBO found that

... if malpractice is defined clearly but too

broadly or if awards tend to be too high, doctors

may engage in defensive medicine, inefficiently

restrict their practices, or retire. Conversely, if

doctors face less than the full costs of their negli-

gence — because they are insulated by liability

insurance or because malpractice is unrecognized

or under-compensated — they may have too little

incentive to avoid risky practices. For all of those

reasons, it is not clear whether trying to control

malpractice by means of liability improves eco-

nomic efficiency or reduces it.

Id. at 2. Similarly, the GAO released two reports examin-

ing issues related to medical malpractice and health care

costs and found that claims that liability costs affect

access to health care were “limited” and “cannot be gener-

alized”. Medical Malpractice: Implications of Rising

Premiums on Access to Health Care, US General Account-

ing Office at 1, GAO-03-836, August 2003; Medical

27

Malpractice Insurance: Multiple Factors Have Contributed

to Increased Premium Rates, US General Accounting

Office, GAO-03-702, June 27, 2003.

Consequently, the fears of employers and their inter-

mediaries that state liability will chill employee benefit

plans and ERISA’s scheme of uniformity are simply

unfounded. There are many ways in which ERISA plans

and providers adhere to state standards, including state

statutes of limitations, mandated benefit requirements for

insurance, and enforcement of judgments. As always,

employers and service providers will successfully adjust.

In contrast, without some state protections, hundreds of

millions of workers, retirees, and their families would

have no source of protection. At a time when access to

health care is more valuable than ever and federal solu-

tions more elusive than ever, the states are critical protec-

tors of our fraying health care system.

¢

CONCLUSION

Justice O’Connor was exactly right when she wrote for

the Court in Pilot Life: “The question whether a certain

state action is pre-empted by federal law is one of congres-

sional intent. ‘The purpose of Congress is the ultimate

touchstone.’” 481 U.S. at 45 (citations omitted) (emphasis

added). As Amici Curiae, we hope this brief has shed light

on that touchstone: we never intended ERISA to preempt

state-based tort remedies grounded in malpractice juris-

prudence brought against managed care entities, i.e.,

HMOs, based on their personnel denying on a prospective

basis a request for care and treatment as not medically

28

necessary where the denial results from medical decision-

making based upon the exercise of discretionary judgment.

For the foregoing reasons, we respectfully request that

the decisions of the Fifth Circuit be affirmed.

Respectfully submitted,

MILES J. ZAREMSKI, ESQ.

Counsel of Record

KAMENSKY & RUBINSTEIN

7250 North Cicero Avenue

Lincolnwood, Illinois 60712-1693

(847) 982-1776

MICHELE VARNHAGEN, Esq.

Democratic Labor Counsel

U.S. House of Representatives

Committee on Education

and the Workforce

2101 Rayburn House Office Building

Washington, D.C. 20515

(202) 226-1881