# Amicus Curiae Brief — Aetna Health Inc. v. Davila

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2004
- **Citation:** 542 U.S. 200

## Text

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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

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0681%3A16. Public record. Not legal advice.