Amicus Curiae Brief — Aetna Health Inc. v. Davila

a

Nos. 02-1845 and

IN THE

Supreme Court of the United States

AETNA HEALTH INC., Petitioner,

Vv.

JUAN DAVILA, Respondent.

CIGNA HEALTHCARE ry a, INC., Petitioner

RUBY R. CALAD, ET AL., Respondents.

On Writs Of Certiorari to the

United States Court of Appeals

for the Fifth Circuit

AMICUS CURIAE BRIEF OF THE

ASSOCIATION OF TRIAL LAWYERS

OF AMERICA

IN SUPPORT OF RESPONDENTS

DAVID S. CASEY, JR. DANIEL M. SOLOWAY *

1050 31st St., N.W. 901 Scenic Highway

Washington, DC 20007 Pensacola, FL 32503

(202) 965-3500 (850) 435-0555

President, * Counsel of Record

The Association of

Trial Lawyers Jeffrey Robert White

of America 1050 31st St., N.W.

Washington, DC 20007

(202) 965-3500

Attorneys for Amicus Curiae

TABLE OF CONTENTS

TABLE OF AUTHORITIEG.......... soccceseeees Lil

IDENTITY AND INTEREST

OF AMICUS CURIAE 1

SUMMARY OF THE ARGUMENT ............00cccssseese 2

ARGUMENT ........0+ 5

I. THE SCOPE OF STATE LAW

PREEMPTED By _ ERISA’S CIVIL

ENFORCEMENT PROVISIONS MUST

BE NARROWLY DRAWN........- en

A. Preemption of State Causes of

Action, Beyond Those Which

Duplicate the Federal Causes of

Action Provided by ERISA,

Intrudes Upon Traditional State

Responsibility for poeneentse

Health and Safety. ; 5

B. This Court Should Narrowly Define

the Preemptive Scope of ERISA’s

Civil Enforcement Provisions To

Avoid Depriving Wrongfully

Injured Persons of All Legal

Remedies........ scssesscesccosece 10

II. ERISA’S CIVIL ENFORCEMENT

RULES PREEMPT ONLY THOSE

STATE LAW CAUSES OF ACTION

WHICH DUPLICATE THE

ENFORCEMENT OF ADMINISTRATIVE

AND PROCEDURAL DUTIES

CREATED BY ERISA. .........ccecccssseseee sossceeee 17

A. ERISA’s Civil Enforcement

Provisions Reflect Congressional

ii

Intent To Federalize Only Those

Administrative Duties Created By

ERISA. 17

B. The Scope of Preemption of State

Causes of Action Under Section 502

Is Defined By the Duties Imposed

By ERISA.. scseecee soeee 20

C. Congress Intended To Preserve

Medical Malpractice Liability

Under State Law. , -

D. ERISA’s Express Preemption and

Savings Clauses Indicate the Intent

of Congress to Preserve State Laws

Regulating the Quality of

Treatment Decisions by Insurers,

HMOs, and Managed Care Entities ... 26

IIILHOLDING HMOs ACCOUNTABLE

FOR THE HARMS THEY CAUSE BY

FAILING TO EXERCISE DUE CARE

WILL NOT RESULT IN INORDINATE

LITIGATION OR HIGHER INSURANCE

CONCLUSION...

. 24

TABLE OF AUTHORITIES

CASES

Alden v. Maine, 527 U. S. 706 (1999). .........ccccccceeeeeees 7

California Federal Savings and Loan Ass’n v.

Guerra, 479 U.S. 272 (1987)..........0ccccccsseceeees 5, 27

Christopher v. Harbury, 536 US. 403 (2002)............ 10

Cipollone v. Liggett Group, Inc., 505 U.S. 504

Si hsctnthsiinananigsantpesamenneessesseseael 5, 6, 14, 17, 23, 27

Crowell v. Benson, 285 U.S. 22, (1932).................000. 13

CSX Transp. Inc. v. Easterwood,

| 6, 27

Duke Power Co. v. Carolina Environmental Study

Group, 438 U.S. 59 (1978)..............cccceccercrssssesseeees 13

English v. General Electric Co., 496 U.S. 72 (1990).16

FTC v. Ticor Title Ins. Co., 504 U.S. 621 (1992). ....... 9

Garcia v. San Antonio Metropolitan Transit

Authority, 469 U.S. 528 (1985), ...............ccceceeeeeeeeees 7

Geier v. American Honda Motor Co., Inc., 529 U.S.

ee 7,9

Goodyear Atomic Corp. v. Miller, 486 U.S. 174

ee 16

Gregory v. Ashcroft, 501 U.S. 452 (1991)................... 7

Hillsborough County v. Automated Medical

Laboratories, Inc., 471 U.S. 707 (1985)..............000. 8

International Paper Co. v. Ouellette, 479 U.S. 481,

|, eT 16

Jones v. Rath Packing Co., 430 U.S. 519 (1977) ..6, 17

Marbury v. Madison, 5 U.S. (1 Cranch) 137 (1803). 10

iv

Medtronic, Inc. v. Lohr,

ofS 5, 6, 16, 23

Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S.

Bee Ge esncetnensesencttannnimnasmnmmennnimaien 18

Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58

CIO cnencancncsnentnsncconastsiinennininidmmemmenenanstinniiininnsinietl 8

Missouri Pacific Ry. Co. v. Humes, 115 U.S. 512

GRE ccconsninsenncmsmnsnuniteiitninissiesietismummnaianientanmaienanamiasiaita 11

New State Ice Co. v. Liebman, 285 U.S. 262 (1931)...8

New York Central R. Co. v. White, 243 U.S. 188

Io ccrainiceniintesciiiceieniaaiinesaieaiialatadaacidittalmaiclia ilaaatinaaes 13

New York State Conference of Blue Cross & Blue

Shield Plans v. Travelers Insurance Co.,

I x 6, 18, 24

New York v. United States, 505 U.S. 144 (1992)........ 9

Norfolk Southern Ry. Co. v. Shanklin, 529 U.S. 344

ee mosiinsemanienaniinabinpuinbiasiditiliaiatitiiaaaiigiai 14

Pacific Gas & Elec. Co. v. Energy Resources Comm'n.,

461 U.S. 190 (1983) ..........cecseceesessesseeseseneeneenensenes 15

Pegram v. Herdrich, 530 U.S. 211 (2000).....19, 25, 29

Pilot Life Ins. Co. v. Dedeaux,

Ge Ds Ge Se ereriictniericicntetinnmenenensl 5,19

PruneYard Shopping Center v. Robins, 447 U.S. 74

EIT covesinnintnsiainseanasinennnasiinenninntnndididumebniineidiinimesitioies 14

Rice v. Santa Fe Elevator Corp..,

ee ee ED ccrniccrentinniicnitcnniminiininnianenitinasil 5

Roark v. Humana, Inc., 307 F.3d 298 (5 Cir. 2002).

sminesbueinbamnaiennenbtacenttithietalngaanepatiiiacihinaaiattililaaaaeiaaiaml 22

Vv

San Diego Building Trades Council v. Garmon, 359

es SEE UIE ele hescicetiscinterinncnsnteiintnaeiasiiteineabiianatinibinaintle 14

Silkwood v. Kerr-McGee Corp., 464 U.S. 238 (1984)15

Three Affiliated Tribes of the Fort Berthold

Reservation v. Wold Engineering, 476 U.S. 877

United Construction Workers v. Laburnum Const.

ks RRR TUE arenremnEne 13

United States v. Lopez, 514 U.S. 549, 577 (1995) ...... 9

Williams v. Good Health Plus, Inc.-Health America

Corp., 743 S.W.2d 373 (Tex. Ct. App. 1987)......... 12

CONSTITUTIONS AND STATUTES

Ee Te 5

Ee STs rciniinitepetenntscnimnipsiniitiesteniiinntesstaiinndiel 8

Ts icsdiiesiitieniccninnitieniaaueaiiantinnianiands 18

en OF EE hccectenninininnnsenttipieieumrenaiemsespiniieninsnil 8

Be Oe tt cnrrnniitcnnersnetiicinnimncatitsiniesetnitiaineiail 26

Pe Oe ED conenscmnnsncsntctnsanceniabatiteseninanel 26

ee OP I vicnrnnntcnnesnitieritaiennnninibiaiaiainiall 6

Se GE, AOD, BGR, BB ccencesscttcenitenninnietianinnnnensnsiis 11

Tex. Civ. Prac. & Rem. Code § 88.001(5).................. 23

Tex. Civ. Prac. & Rem. Code § 88.002(a)......12, 23, 26

Tex. Civ. Prac. & Rem. Code § 88.002(d).................. 24

OTHER AUTHORITIES

Aston, Geri, “Texas Trial: HMO Liability Law,”

American Medical News (May 28, 2001).............. 29

Blackstone, William, COMMENTARIES ON THE LAWS OF

ETE TIER Rene ce mee! a 11

Coke, Edward, SECOND PART OF THE INSTITUTES OF

THE LAWS OF ENGLAND (4* ed. 1671) ..................+. 11

Hall, Mark A., and Gail Agrawal, “The Impact of

State Managed Care Liability Statutes,” 22 Health

SE ED conreenetetnnneemimmeemmnenes 29

Kaiser Family Foundation, “Impact of Potential

Changes to ERISA: Litigation and Appeals

Experience of CalPERS, Other Large Public

Employers, and a Large California Health Plan”

iC NSPE NECN IRE EE ere oe 28

Rosenblatt, Rand E., et al., LAW AND THE AMERICAN

HEALTHCARE SYSTEM (1997 & Supp.) .................. 18

Sandor, Andrew A., The History of Professional

Liability Suits in the United States, 163 J.A.M.A.

TT ccesiesdcineeietihaaiehaaeniomaeneneatdiaieriatenh dei laaadaeiiaad taal 11

Schuman, David, The Right to a Remedy, 65 Temple

SS RS CEOS erern ees 11

Starr, Kenneth, et al., THE LAW OF PREEMPTION: A

REPORT OF THE APPELLATE JUDGES CONFERENCE OF

THE AMERICAN BAR ASSOCIATION (1991).................. G

Thornton, Scott, The Texas Health Care Liability Act:

Managed Care Organizations Can Say Goodbye To

Their Extensive Immunity From Lawsuits — Or At

Least That Was How It Was Supposed To Work, 30

Tex. Tech L. Rev. 1227 (1999)................ssseccceccecees 12

Vii

Turner, Shannon, ERISA Preemption of Direct

Liability claims: Texas Throws Down the Gauntlet,

78 Tex. L. Rev. 211 (1999)

Nos. 02-1845 and 03-83

IN THE

Supreme Court of the United States

AETNA HEALTH INC., Petitioner,

v.

JUAN DAVILA, Respondent.

CIGNA HEALTHCARE OF TEXAS, INC., Petitioner

v.

RuBY R. CALAD, ET AL., Respondents.

On Writs Of Certiorari to the

United States Court of Appeals

for the Fifth Circuit

AMICUS CURIAE BRIEF OF

THE ASSOCIATION OF TRIAL LAWYERS

OF AMERICA

IN SUPPORT OF RESPONDENTS

IDENTITY AND INTEREST OF AMICUS CURIAE

The Association of Trial Lawyers of America

(“ATLA”] respectfully submits this brief as amicus

curiae. The parties have filed letters of consent to the

filing of amicus briefs with this Court.!

1 Pursuant to Rule 37.6, Amicus discloses that no counsel

for a party authored any part of this brief, nor did any person or

entity other than Amicus Curiae, its members, or its counsel

2

ATLA is a voluntary national bar association

whose approximately 50,000 trial lawyer members

primarily represent individual plaintiffs in civil

actions.

Many of those individuals are those who have

suffered harm due to substandard medical care.

Increasingly, as managed care has come to dominate

the health care delivery system, they include those

harmed by poor medical decisions, not by their

treating physicians, but by plan administrators or

others performing utilization review in the managed

care setting.

In ATLA’s view, the Texas Health Care

Liability Act, which holds insurers, HMOs, and

managed care entities accountable when they fail to

use ordinary care when making medical decisions,

provides an incentive to minimize such harm and

affords access to a legal remedy for wrongfully

injured victims.

- SUMMARY OF THE ARGUMENT

1. This case, like every preemption case, is about

federalism. Respondents’ causes of action arise under

the Texas Health Care Liability Act, which requires

health insurers, HMOs and managed care entities to

use due care when they make health treatment

decisions, including determinations of “medical

necessity” under an ERISA plan. Petitioners contend

that these damage actions are preempted — not

under the express preemption provisions Congress

included in ERISA, but by operation of implied

make a monetary contribution to the preparation or submission

of this brief.

3

“complete preemption” of ERISA’s civil enforcement

provisions.

ATLA urges this Court to define the scope of

this implied preemption narrowly. This Court has

consistently emphasized that to protect the role of

the sovereign states, it will find preemption of state

law only where Congress has made clear and

manifest its intent to do so, particularly strong

where, as here, Congress has acted in an area

traditionally regulated by the states. Moreover, the

presumption applies not only to the question of

whether federal law supersedes state law, but also to

the scope of preemption.

By requiring that Congress make its intent

clear and manifest, the Court preserves the

structural protection of the states through their

representation in Congress. At the same time, the

Court allows states to serve as laboratories in

protecting the health and welfare of their citizens

and preserves the political accountability of local

officials in the exercise of this responsibility. Broad

application of implied preemption by the judiciary

undermines federalism.

Narrowly circumscribing preemption in this

case is also necessary to avoid depriving wrongfully

injured persons of any legal remedy. The right of

access to the courts for legal redress is a

fundamental right, grounded in the Constitution and

in the foundations of the common law. This Court

has suggested that legislation which deprives

wrongfully injured persons of all means of remedy

violates due process. At the least, this Court should

not impute to Congress the unexpressed intention to

shut the courthouse doors to the very persons ERISA

was intended to protect.

+

2. The court of appeals below correctly restricted the

scope of preemption state causes of action that

duplicate the duties established in ERISA itself. The

structure of the statute, which imposes duties that

are administrative and procedural in nature,

indicates that Congress did not intend to eliminate

state law duties concerning the quality of medical

treatment decisions.

This Court has laid out a clear path for

determining whether a plaintiffs cause of action is

preempted by federal requirements. That analysis

looks to the duties that are the predicate for

plaintiffs cause of action. In this case, the duty of

care imposed by the Texas act does not duplicate or

conflict with the administrative and procedural

duties imposed by ERISA. Indeed, as this Court has

indicated, Congress appears to have assumed that

state professional liability standards would continue

to serve as a check on the financial interests of

providers. ERISA’s savings clause, preserving state

laws that, like the Texas statute, regulate insurance,

strongly indicates the intent of Congress to save such

state regulation from preemption.

3. Petitioners’ alarmist warnings that upholding the

Texas statute will result in substantial increases in

the cost of benefit plans are contrary to the

experience in Texas and elsewhere. Liability of

managed care entities has resulted in neither a flood

of litigation nor significant increases in premiums.

More fundamentally, balancing the costs of liability

against the reduction of wrongful injury is one that

is most appropriate for the legislature. The Texas

legislature has done precisely that, and this Court

should not set aside the result.

ee

ARGUMENT

I. THE SCOPE OF STATE LAW PREEMPTED BY

ERISA’S CIVIL ENFORCEMENT PROVISIONS

MUST BE NARROWLY DRAWN.

A. Preemption of State Causes of Action,

Beyond Those Which Duplicate the

Federal Causes of Action Provided by

ERISA, Intrudes Upon Traditional State

Responsibility for Protecting Health and

Safety. z

Every preemption case is about federalism.

The Supremacy Clause grants Congress the power to

set aside the laws of the States. U.S. Const., art. VI,

cl. 2. In determining whether Congress has exercised

this substantial power, the intent of Congress

provides the “ultimate touchstone.” Pilot Life Ins. Co.

v. Dedeaux, 481 U.S. 41, 45 (1987) (quoting prior

cases), and the judiciary’s “sole task is to ascertain

the intent of Congress.” California Federal Savings

and Loan Ass’n v. Guerra, 479 U.S. 272, 281 (1987).

In many cases and in many circumstances,

especially in matters involving the health and safety

of Americans, this Court has approached this task

with a “strong presumption against preemption.”

Cipollone v. Liggett Group, Inc., 505 U.S. 504, 523

(1992). The Court has stated it will find preemption

only where Congress has made its intent to override

state law “clear and manifest.” Rice v. Santa Fe

Elevator Corp., 331 U.S. 218, 230 (1947), quoted in

Cipollone, supra, at 516; and in Medronic, Inc. v.

Lohr, 518 U.S. 470, 485 (1996).

Requiring that Congress make clear its intent

to override state law “provides assurance that the

6

federal-state balance . . . will not be disturbed

unintentionally by Congress or unnecessarily by the

courts.” Jones v. Rath Packing Co., 430 U.S. 519, 525

(1977). The Court thereby promotes a healthy

federalism by “avoiding unintended encroachments

on the authority of the States.” CSX Transp. Inc. v.

Easterwood, 507 U.S. 558, 664 (1993).

This presumption against preemption applies

not only to the question of whether Congress

intended to preempt state law, but it also requires

that courts narrowly define the scope of preemption.

Medtronic, Inc. v. Lohr, supra, at 485; Cipollone,

supra, at 518. See also CSX Transp. Inc. v.

Easterwood, supra, at 658-59 (narrowly construing

the scope of express preemption under the Federal

Railroad Safety Act “in light of the presumption

against preemption”).

This principle is fully applicable to questions

regarding the scope of preemption of state law by the

Employee Retirement Income Security Act (ERISA),

29 U.S.C. § 1001 et seg. Addressing ERISA’s express

preemption provision, § 514(a), 29 U.S.C. § 1144(a),

the Court stated:

{I]n cases like this one, where federal law is said

to bar state action in fields of traditional state

regulation, we have worked on the “assumption

that the historic police powers of the States were

not to be superseded by the Federal Act unless

that was the clear and manifest purpose of

Congress.”

New York State Conference of Blue Cross & Blue

Shield Plans, Inc. v. Travelers Ins. Co., 514 U.S. 645,

655 (1995) (citations omitted).

Narrowly construing the scope of federal

preemption is necessary to preserve “the

7

constitutional role of the States as sovereign

entities.” Alden v. Maine, 527 U. S. 706, 713 (1999).

The Court in Garcia v. San Antonio Metropolitan

Transit Authority, 469 U.S. 528 (1985), determined

that the States do not enjoy substantive protection

under the Tenth Amendment. Rather, their

sovereign interests “are more properly protected by

the procedural safeguards inherent in the structure

of the federal system,” by virtue of the States’

representation in Congress. Id. at 552.

The corollary to this proposition is that the

States must be assured meaningful opportunity to

protect their interests by requiring that Congress

make clear the extent to which federal legislation is

to override state law. As Justice O'Connor has

explained:

By declining to infer preemption in the face of

congressional ambiguity, the Court is...

furthering the spirit of Garcia by requiring that

decisions restricting state sovereignty be made in

a deliberate manner by Congress, through the

explicit exercise of its lawmaking power to that

end.

*x * x

Application of the plain statement rule thus may

avoid a potential constitutional problem. Indeed,

inasmuch as this Court in Garcia has left

primarily to the political process the protection of

the States against intrusive exercises of

Congress' Commerce Clause powers, we must be

absolutely certain that Congress intended such

an exercise.

Gregory v. Ashcroft, 501 U.S. 452, 464 (1991). See

also Geier v. American Honda Motor Co., Inc., 529

U.S. 861, 907 (2000) (Stevens, J., dissenting).

8

Petitioners in this case ask the Court to

broadly extend the scope of “complete” preemption

under § 502(a) of ERISA, 29 U.S.C. § 1132(a).

Significantly, the Court’s decision that a claim for

benefits that falls within § 502(a) is completely

preempted, not only invalidating the state law claim

but transforming it into one that arises under federal

law, is not based on the text of the statute.

Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 64-

66 (1987).

ATLA submits that the range of state laws

subject to this “extraordinary preemptive power,” id.

at 65, be narrowly circumscribed.

The “regulation of health and safety matters is

primarily and historically, a matter of local concern.”

Hillsborough County v. Automated Medical

Laboratories, Inc., 471 U.S. 707, 719 (1985). The

licensing, regulation, and tort liability of physicians,

hospitals and other health care providers is the

responsibility of the states. Regulation of the

business of insurance is the exclusive province of the

states. McCarran-Ferguson Act, 15 U.S.C. § 1012(b).

Yet Petitioners would deprive state lawmakers

of the authority to protect their citizens in the

changing medical care system, locking them into a

‘regime of non-accountability for medical care

organizations despite the lack of any clear evidence

of congressional intent to do so. Such unduly broad

preemption forecloses one of the “happy incidents of

our federal system,” that a state may serve as a

“laboratory” in protecting the health and wellbeing of

its citizens as health care delivery changes. New

State Ice Co. v. Liebman, 285 U.S. 262, 280 (1931)

(Brandeis, J., dissenting).

———_—_— io

9

Equally important, the proper federal-state

balance preserves the political accountability of

officials responsible for taking such actions.

“Federalism serves to assign political responsibility,

not to obscure it.” United States v. Lopez, 514 U.S.

549, 577 (1995), quoting FTC v. Ticor Title Ins. Co.,

504 U.S. 621, 636 (1992). Narrowly construing the

unexpressed intent of Congress to override state law

preserves the objective that “state governments

remain responsive to the local _ electorate’s

preferences [and] state officials remain accountable

to the people.” New York v. United States, 505 U.S.

144, 168 (1992).

. Focusing on the institutional responsibility of

the judicial branch, Judge Kenneth Starr has

pointed out the dangers of the course urged by

Petitioners:

When courts preempt state laws without explicit

congressional guidance, unelected and

unaccountable officials substitute their

preferences for those of the citizens of local

communities. Unguided preemption thus erodes

our national commitment to the process of self-

governance . . . When judges preempt state laws

in the absence of explicit congressional guidance,

they in effect assume a legislative role without

accepting legislative responsibility. [In addition]

the overarching guarantee of “Our Federalism” is

defeated.

Kenneth Starr, et al.. THE LAW OF PREEMPTION: A

REPORT OF THE APPELLATE JUDGES CONFERENCE OF

THE AMERICAN BAR ASSOCIATION 48-49 (1991).2

2 See also Geier v. American Honda Motor Co., Inc., 529 U.S.

861, 907 (2000) (Stevens, J., dissenting) (“the presumption

10

B. This Court Should Narrowly Define the

Preemptive Scope of ERISA’s Civil

Enforcement Provisions To Avoid

Depriving Wrongfully Injured Persons of

All Legal Remedies.

1. The Right of Access To the Courts To Seek

Legal Redress For Injury Is a Fundamental

Right.

From our nation’s earliest days, this Court has

recognized the duty of government to provide legal

recourse for injury. Chief Justice Marshall stated:

[Tlhe very essence of civil liberty certainly

consists in the right of every individual to claim

the protection of the laws, whenever he receives

an injury. One of the first duties of government

is to afford that protection.

Marbury v. Madison, 5 U.S. (1 Cranch) 137, 163

(1803). As Justice O'Connor has observed, “(Tlhe

federal interest in ensuring that all citizens have

access to the courts is obviously a weighty one.”

Three Affiliated Tribes of the Fort Berthold

Reservation v. Wold Engineering, 476 U.S. 877, 887

(1986) (citations omitted). More recently, this Court

confirmed that this right is fundamental and

grounded in the Constitution. Christopher uv.

Harbury, 536 US. 403, 414 n.12 (2002).

The ancient right of access to the courts to

seek legal remedy for wrongful injury predates the

serves as a limiting principle that prevents federal judges from

running amok with our potentially boundless (and perhaps

inadequately considered) doctrine of implied conflict pre-

emption based on frustration of purposes”).

11

Constitution itself. Lord Coke traced it to the Magna

Carta,? and Blackstone declared it to be an

“invariable principle in the laws of England, that

every right, when withheld, must have a remedy,

and every injury its proper redress.”4 This Court has

pronounced it “the duty of every State to provide, in

the administration of justice, for the redress of

private wrongs” under the Due Process Clause of the

Fourteenth Amendment. Missouri Pacific Ry. Co. v.

Humes, 115 U.S. 512, 521 (1885).

The right to a remedy is expressly guaranteed

in the state constitution of Texas,5 and in 38 other

state constitutions. David Schuman, The Right to a

Remedy, 65 Temple L. Rev. 1197, 1199-1201 (1992).

The common law cause of action for injuries

and deaths caused by medical malpractice is well

settled in every state. Andrew A. Sandor, The

History of Professional Liability Suits in the United

States, 163 J.A.M.A. 459 (1957) (citing the first

-malpractice decision in each state). Following

3 Every Subject may take his remedy by the course of the

Law, and have justice, and right for the injury done to

him, freely without sale, fully without denial, and

speedily without delay.

Edward Coke, SECOND PART OF THE INSTITUTES OF THE LAWS OF

ENGLAND 55-56 (4th ed. 1671).

4 3 William Blackstone, COMMENTARIES ON THE LAWS OF

ENGLAND *23 & *109 (1765).

5

All courts shall be open, and every person

injury done him, in his lands, goods,

reputation, shall have remedy by due course of law.

Vernon's Ann. Texas Const. Art. I, sec.13.

oy

12

hearings and testimony concerning harms cause by

negligent medical decisions by managed care

organizations, the citizens of Texas, through their

elected representatives, extended the malpractice

cause of action to “health insurance carrier, health

maintenance organization, or other managed care

entity for a health care plan.” Tex. Civ. Prac. & Rem.

Code Ann. § 80.002(a). See Comment,. Scott

Thornton, The Texas Health Care Liability Act:

Managed Care Organizations Can Say Goodbye To

Their Extensive Immunity From Lawsuits - Or At

Least That Was How It Was Supposed To Work, 30

Tex. Tech L. Rev. 1227, 1233-35 (1999). The

legislation was enacted with overwhelming

bipartisan support. Jd. Essentially, the Texas Act

does not require insurers or HMOs to provide any

particular benefit. However, if they insist on making

medical judgments, they must exercise care in doing

so and may be held accountable for the harm they

cause by breaching that duty. See Note, Shannon

Turner, ERISA Preemption of Direct Liability claims:

Texas Throws Down the Gauntlet, 78 Tex. L. Rev.

211, 214 (1999).6

It is undisputed that ERISA imposes no duty

with respect to the quality of medical treatment

decisions, nor does it provide any cause of action for

compensatory damages arising from the failure to

exercise due care. The broad preemption sought by

Petitioners would close the doors of the courthouse to

6 Legislative action was necessary to overturn Williams v. Good

Health Plus, Inc.-HealthAmerica Corp., 743 S.W.2d 373, 378

(Tex. Ct. App. 1987) (holding that, because corporations cannot

practice medicine, HMOs cannot be liable for medical

malpractice). See Turner, supra, at 213-14.

13

victims of such failure to use due care, leaving them

without any legal remedy. ;

This Court has indicated that complete

elimination of state tort actions for compensation of

injury may violate substantive due process unless

the legislature has provided a reasonable alternative

remedy. For example, this Court has upheld the

elimination of tort actions by workers for job-related

injuries where the legislature has provided “a

reasonably just substitute” in the form of workers’

compensation. New York Central R. Co. v. White, 243

U.S. 188, 198 (1917). Similarly, the Court held that

the Longshoremen's and Harbor Workers’

Compensation Act, 33 U.S.C.A. § 901 et. seq. did not

violate due process where Congress provided a

federal statutory benefit scheme in place of maritime

tort causes of action for injury. Crowell v. Benson,

285 US. 22, 40-44 (1932) (citing authorities

addressing both state and federal legislation). See

also United Construction Workers v. Laburnum

Const. Co., 347 U.S. 656, 665 (1954).

This Court in Duke Power Co. v. Carolina

Environmental Study Group, 438 U.S. 59 (1978),

suggested that the complete abolition in the Price-

Anderson Act of common-law tort suits for damages

in nuclear power accidents might violate substantive

due process except for the “panoply of remedies and

guarantees” provided by Congress. Jd. at 86-88 and

91-93. As Justice Marshall later remarked, “our

cases demonstrate that there are limits on

governmental authority to abolish ‘core’ common-law

rights, . . . at least without a compelling showing of

necessity or a provision for a reasonable alternative

14

remedy.” PruneYard Shopping Center v. Robins, 447

U.S. 74, 93-94 (1980) (Marshall, J., concurring).’

This Court need not delimit here the outer

boundaries of Congress’ authority in this regard.

7 In Geier v. American Honda Motor Co., Inc., 529 U.S. 861

(2000), Norfolk Southern Ry. Co. v. Shanklin, 529 U.S. 344

(2000) and in Cipollone, supra, this Court held that federal

regulations preempted certain state tort causes of action. Those

cases;hewever, are distinguished by the direct conflict between

the state law and federal regulation.

In Shanklin and Cipollone, this Court viewed state tort

actions as equivalent to state regulation that was inconsistent

with and preempted by express preemption provisions enacted

by Congress. See Cipollone at 521, quoting San Diego Building

Trades Council v. Garmon, 359 U.S. 236, 247 (1959)state

“regulation can be as effectively asserted through an award of

damages ac through” administrative regulation). In this case

there is no such conflict because the Texas law is limited to

treatment- decisions and ERISA § 202 does not address the

quality of treatment decisions.

Significantly, the Garmon Court carefully conditioned

its ouster of state law on the understanding that access to

justice would be assured through alternative federal remedies.

The majority opinion emphasized the fact that the NLRA

established a set of procedures and remedies in place of the

state law remedies displaced by the Act. 359 US. at 243. Justice

Harlan, in his concurring opinion, cautioned that, where

Congress has not provided a remedy for tortious conduct, “there

is no ground for concluding that existing criminal penalties or

liabilities for tortious conduct have been eliminated.” Jd. at 252

(Harlan, J., concurring).

Geier, by contrast, involved implied “conflict”

preemption of state law. This Court carefully distinguished

such preemption from congressional “intent to displace all state

law in a particular area.” Jd. at 884. ATLA suggests that the

latter variety of preemption, which the Court referred to as “so-

called field pre-emption,” is the type which § 502 of ERISA

presents to this Court.

—-

il ~--- _-

15

Congress has given no clear and manifest indication

in ERISA of any intent to eliminate state causes of

action for harm caused by negligent treatment

decisions, and Petitioners point to none. In

ascertaining the extent of Congress’ intent to

supersede state law, this Court has repeatedly stated

that it will not read into congressional silence an

intent to leave injured persons without any remedy

at all.

For example, Pacific Gas & Elec. Co. v. Energy

Resources Comm'n., 461 U.S. 190, 212 (1983), held

that Congress intended to occupy the field of safety

regulation of nuclear power facilities. Nevertheless,

this Court held the following year that the

preempted field did not extend to state tort actions

for injury caused by negligent administration of

safety regulations. In Silkwood v. Kerr-McGee Corp.,

464 U.S. 238 (1984), the Court pointedly noted

“Congress’ failure to provide any federal remedy for

persons injured by such conduct.” Justice White,

writing for the majority, concluded that Congress

could not have intended to preempt state tort causes

of action. “It is difficult to believe that Congress

would, without comment, remove all means of

judicial recourse for those injured by illegal conduct.”

464 U.S at 251. Justice Blackmun, in his dissent,

agreed with the majority on this point. “The absence

of federal regulation governing the compensation of

victims is strong evidence that Congress intended

the matter to be left to the States.” 464 U.S. at 264

n.7. (Blackmun, J., dissenting).

The Court subsequently held that, even if

liability under state workers’ compensation statutes

or state tort remedies might exert an indirect

influence over how nuclear plants carry out federal

16

safety regulations, Congress did not intend to

preempt such state causes of action and leave injured

persons without remedy. Goodyear Atomic Corp. uv.

Miller, 486 U.S. 174, 185 (1988), and English v.

General Electric Co., 496 U.S. 72, 85 (1990).

Compare, International Paper Co. v. Ouellette, 479

U.S. 481, 497 (1987) (finding implied preemption of

state nuisance law by the federal Clean Water Act,

where the result “does not leave respondents without

a remedy.” ).

The Court took much the same position in

Medtronic, Inc. v. Lohr, 518 U.S. 470, 485 (1996).

Rejecting the company’s assertion that the scope of

Congress’ express preemption of state standards in

the federal Medical Device Amendments extended to

state causes of action for personal injury, Justice

Stevens wrote for the plurality:

Medtronic's argument is not only unpersuasive,

it is implausible. Under Medtronic’s view of the

statute, Congress effectively precluded state

courts from affording state consumers any

protection from injuries resulting from a

defective medical device. Moreover, because

there is no explicit private cause of action against

manufacturers contained in the MDA, and no

suggestion that the Act created an implied

private right of action, Congress would have

barred most, if not all, relief for persons injured

by defective medical devices. Medtronic’s

construction of § 360k would therefore have the

perverse effect of granting complete immunity

from design defect liability to an entire industry

that, in the judgment of Congress, needed more

stringent regulation.

518 U.S. at 487 (plurality opinion).

~_-—- -

17

ATLA submits that these same principles

should lead this Court to reject Petitioners’ argument

that Congress impliedly intended the scope of

preemption under § 502(a) of ERISA to include state

law causes of action like that provided under the

Texas statute. Petitioners would have this Court

slam shut the courthouse doors that the people of

Texas, through their elected legislators, have held

open.

Such a result would be an especially unlikely

and perverse outcome of Congress’ work in ERISA.

The statute’s stated purpose was to protect the rights

of American workers and their families, a valued

constituency of all legislators. This Court should

hesitate to impute to Congress the intent to enact a

law that is not only unjust, but senselessly so.

II. ERISA’S CIvIL ENFORCEMENT RULES

PREEMPT ONLY THOSE STATE LAW CAUSES

OF ACTION WHICH DUPLICATE THE

ENFORCEMENT OF ADMINISTRATIVE AND

PROCEDURAL DUTIES CREATED BY ERISA.

A. ERISA’s Civil Enforcement Provisions

Reflect Congressional Intent To

Federalize Only Those Administrative

Duties Created By ERISA.

Congress’ intent may be “explicitly stated in

the statute’s language or implicitly contained in its

structure and purpose.” Cipollone at 516, quoting

Jones v. Rath Packing Co., 430 U.S. 519, 525 (1977).

In cases involving ERISA preemption, the Court has

looked to “the objectives of the ERISA statute as a

guide to the scope of the state law that Congress

understood would survive.” New York State

18

Conference of Blue Cross & Blue Shield Plans v.

Travelers Insurance Co., 514 U.S. 645, 656 (1995).

Congress enacted ERISA in 1974 “to promote

the interest of employees and their beneficiaries in

employee benefit plans.” Shaw v. Delta Air Lines,

Inc., 463 U.S. 85, 90 (1983). See 29 U.S.C. § 1001(a)

(1994). Congress did not mandate any particular set

of benefits, nor did it regulate the quality of

treatment decisions. “ERISA thus contains almost no

federal regulation of the terms of benefit plans.”

Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S.

724, 732 (1985). Rather, ERISA “controls the

administration of benefit plans.” Travelers, supra, at

651.

ERISA establishes uniform duties for plan

administrators and individual rights for plan

participants regarding the way the plan is

administered, notice and appeal procedures. See

Rand E. Rosenblatt et al., LAW AND THE AMERICAN

HEALTHCARE SYSTEM 197 (1997 & Supp.) (discussing

mandated benefits under ERISA).

In § 502 Congress established the means to

enforce the rights and duties prescribed in the

statute. It was clear to this Court that these duties

are administrative and procedural in nature.

Under the civil enforcement provisions of §

502(a), a plan participant or beneficiary may sue

to recover benefits due under the plan, to enforce

the participant's rights under the plan, or to

clarify rights to future benefits. Relief may take

the form of accrued benefits due, a declaratory

judgment on entitlement to benefits, or an

injunction against a plan administrator's

improper refusal to pay benefits.

19

Pilot Life, supra, at 53. “In sum,” the Court stated,

“the detailed provisions of § 502(a) set forth a

comprehensive civil enforcement scheme” to address

“the need for prompt and fair claims settlement

procedures.” Jd. at 54. In addition, Congress “makes

clear its intention that all suits brought by

beneficiaries or participants asserting improper

processing of claims under ERISA-regulated plans be

treated as federal questions governed by § 502(a).”

Id. at 56 (emphasis added).

In Pegram v. Herdrich, 530 U.S. 211, 237

(2000), this Court held that the civil enforcement

provisions in § 502 were intended to enforce federal

duties on plan administrators regarding “pure

eligibility” decisions, which the Court defined as

decisions which “turn on the plan’s coverage of a

particular condition or medical procedure for its

treatment.” Jd. at 228. The statute imposes no duties

with respect to treatment decisions “about how to go

about diagnosing and treating a patient’s condition.”

Id. Nor does the statute impose any duties with

respect to “mixed eligibility decisions,” including a

determination of medical necessity. Id. at 229-30.

Indeed, the Court observed, “it is at least

questionable whether Congress would have had

mixed eligibility decisions in mind” when it provided

for enforcement of the fiduciary duties of those

administering a plan. Jd. at 232.

The structure of the statute, which imposes

only administrative duties focusing on pure

eligibility decisions, and the statute’s purpose of

providing enforcement of uniform prompt and fair

claims procedures, suggest that Congress intended

complete preemption only of a state cause of action

that has “duplicated the elements of a claim

20

available under ERISA.” Rush Prudential HMO, Inc.

v. Moran, 536 U.S. 355, 379 (2002).

The court of appeals, ATLA submits, correctly

defined the scope of preemption under § 502 of

ERISA.

B. The Scope of Preemption of State Causes

of Action Under Section 502 Is Defined

By the Duties Imposed By ERISA.

1. Petitioners’ Description of the Scope of

Preemption Under § 502 Is Overly Broad and

Unworkable.

Petitioners reject the reasoning of the court

below, which limited the scope of preemption under §

502 to state causes of action that duplicate the

elements of a claim under ERISA. They urge this

Court to extend the scope of preemption far beyond

those elements to include claims involving treatment

decisions that Congress did not provide for. However,

Petitioners offer no clear, workable boundaries to

determine what is preempted, and they depart from

the path that this Court has clearly marked.

Aetna suggests that the scope of preemption

be based on the type of damages plaintiff seeks.

Aetna argues, “any state-law remedy that offers plan

participants a form of relief not available under

ERISA is completely preempted.” Brief of Aetna

Health Inc. at 12. In Aetna’s view, “Section

502(a)(1)(B) does not permit the award of legal relief

— such as consequential and punitive damages other

than withheld benefits.” Jd. at 20.

ATLA submits that Aetna confuses “remedies”

with damages. Suppose an HMO administered an

ERISA plan in a racially discriminatory manner, or

in a manner that violated state patient privacy laws.

21

Aetna’s position suggests that the HMO should be

immune from such claims if they seek compensatory

or punitive damages. If an HMO is not to be

completely immune from damage claims for even

egregious misconduct, Aetna offers no boundary to

divide permissible claims for legal damages from

preempted claims.

Later in its brief, Aetna appears to refine its

argument, stating that “an action is within the scope

of ERISA’s remedial provision — and is therefore

completely preempted — if it challenges conduct that

could have been challenged in an ERISA action, but

. . . purports to authorize actions for relief not

permitted by ERISA or based on conduct not

actionable under ERISA. Id. At 26.

ATLA suggests that this self-negating

definition of preempted causes of action — those

based on conduct which could be challenged in an

ERISA action, but not actionable under ERISA - is

less than helpful.

Cigna adopts a somewhat different approach,

asserting that the scope of preemption extends to

state law causes of action seeking damages for

wrongful denial of benefits. “The sole monetary

remedy a court may provide in such an action is the

benefit itself; [the civil enforcement provisions] thus

preempt any state-law claims that purport to provide

different or additional remedies for allegedly

erroneous benefit denials” Brief of Cigna HealthCare

of Texas at 5. Hence, Cigna reasons, “a state-law

contract or tort claim asserting that a benefit under

an ERISA-governed plan was improperly denied, and

seeking remedies different from or in addition to the

exclusive set of remedies set forth in ERISA § 502(a),

is preempted.” Id. at 17.

22

The Solicitor General echoes this view that the

scope of preemption is defined by the plan’s conduct .

in denying benefits. “Respondents’ state-law claims

are completely-preempted . . . because petitioners’

liability is dependent on a showing that respondents

were entitled to have petitioners pay for benefits

under the plans.” Brief of the Unites States as

Amicus Curiae at 7.

The error inherent in the views of Cigna and

the Solicitor General is that Congress does not

preempt conduct; it preempts state law — in this case

a state-law cause of action. The gist of Petitioners’

cause of action is failure to exercise ordinary care in

making treatment, decisions. Whether the patient

was entitled under the plan to the medicine or

procedure involved may be a circumstance, but it is ~

not an element of the state law claim.

Plaintiff Davila, for example, suffered injury

caused not by denial of Vioxx, but by the

administration of naprosyn, despite its known higher

rate of gastric toxicity, resulting in severe gastric

ulcers. Roark v. Humana, Inc., 307 F.3d 298, 303 (5%

Cir. 2002). Walter Thorn, whose case was also

decided by the court below, asserted a cause of action

based on his plan’s arbitrary delay in performing a

surgery that had already been approved. Jd. at 302.

ATLA submits that the reasoning of the court

of appeals adheres most faithfully to this Court’s

preemption precedents.

2. The Scope of Preemption Under § 502 Is

Determined by Examining the Legal Duty

Which Forms the Basis For A Plaintiff's Cause

of Action.

23

Petitioners’ arguments stray far from the well-

marked path this Court has laid out for determining

whether a state cause of action is preempted by

congressionally mandated requirements:

[Wje must fairly but - in light of the strong

presumption against pre-emption -— narrowly

construe the precise language of [the express

preemption] and we must look to each of

petitioner’s common-law claims to determine

whether it is in fact pre-empted. The central

inquiry in each case is straightforward: we ask

whether the legal duty that is the predicate of the

common-law damages action constitutes [a

preempted “requirement or prohibition”).

Cipollone, at 523-24. (emphasis added). Compare

Medtronic, supra, at 492-502, in which the Court

examined the predicate legal duty of each of

plaintiffs state causes of action to determine

whether it fell within the preempted zone.

The Texas Health Care Liability Act provides:

A health insurance carrier, health maintenance

organization, or other managed care entity for a

health care plan has the duty to exercise

ordinary care when making health care

treatment decisions and is liable for damages for

harm to an insured or enrollee proximately

caused by its failure to exercise such ordinary

care.

Tex. Civ. Prac. & Rem. Code § 88.002(a). A “health

care treatment decision” is “a decision which affects

the quality of the diagnosis, care, or treatment

provided to the plan’s insureds or enrollees.” Tex.

Civ. Prac. & Rem. Code § 88.001(5). The statute

specifically provides that there is “no obligation on

the part of the health insurance carrier, health

24

maintenance organization, or other managed care

entity to provide to an insured or enrollee treatment

which is not covered by the health care plan of the

entity.” Tex. Civ. Prac. & Rem. Code § 88.002(d).

By its terms, the statute imposes no duty with

respect to the administration of plans, which is the

subject of ERISA. Pure eligibility decisions, for

example, are not actionable under the statute.

Rather, the “legal duty that is the predicate” of a

cause of action under the THCLA is the duty to

exercise ordinary care with respect to treatment

decisions, a duty that ERISA does not encompass.

C. Congress Intended To Preserve Medical

Malpractice Liability Under State Law.

Federal law has a “generally interstitial

character, in the sense that Congress generally

enacts legislation against the background of existing

state law.” Three Affiliated Tribes of the Fort

Berthold Reservation v. Wold Engineering, 476 U.S.

877, 895-96 (Rehnquist, J., dissenting) (citations

omitted).

The is particularly true with respect to

ERISA. The Court found that “nothing in the

language of [ERISA] or the context of its passage

indicates that Congress chose to displace general

health care regulation, which historically has been a

matter of local concern.” Travelers, supra, at 661.

Indeed, this Court determined that the state

medical malpractice standard, “the professional

obligation to provide covered services with a

reasonable degree of skill and judgment in the

patient's interest,” would serve as a “check” on HMO

doctors so that treatment decisions are not made

-

25

solely on the basis of financial interest. Pegram,

supra, at 219. -

The HMO itself, of course, has the same

financial interest in providing less or cheaper care.

As this Court also observed, “many doctors and other

observers argue that HMOs often ignore the

individual needs of a patient in order to improve the

HMOs' bottom lines.” Id. at 220. The Texas

legislators made use of the same “check” to counter

this financial pressure by requiring that HMOs and

managed care entities use ordinary care when

making treatment decisions.

Significantly, the Court in Pegram indicates

that Congress envisioned statutes like the THCLA to

operate as part of the “general background” of state

law. The Court stated that allowing a federal suit

against an HMO under § 502 for the medical

necessity decision of a physician-owner would be

“mere replication of state malpractice actions with

HMO defendants.” Jd. at 236. The only jurisdictions

in which such a federal cause of action would be

beneficial, the court stated, were those “States that

do not allow malpractice actions against HMOs.” Id.

at 235.

p The Court raised the idea that such potential

duplication “would seem to be a prescription for

preemption of state malpractice law.” Id. Just a

quickly, however, the Court stated that the

presumption against preemption “throws some cold

water on the preemption theory.” Jd. at 237. In the

absence of any indication that Congress intended to

federalize the law of medical malpractice, the Court

concluded that plaintiffs should look to state law,

including “state malpractice actions with HMO

defendants” for relief.

26

D. ERISA’s Express Preemption and

Savings Clauses Indicate the Intent of

Congress to Preserve State Laws

Regulating the Quality of Treatment

Decisions by Insurers, HMOs, and

Managed Care Entities.

Further evidence of Congress’ intent to leave

intact state laws like THCLA, which impose a duty

of care on HMOs and managed care entities when

they make health treatment decisions, is found in

ERISA’s express preemption provision.

Congress expressly preempted all state laws

that “relate to any employee benefit plan.” Sec.

514(a), as set forth in 29 U.S.C. § 1144(a). However,

Congress added a savings clause, stating that

“nothing in this subchapter shall be construed to

exempt or relieve any person from any law of any

State which regulates insurance.” Sec. 514(b)(2)(A),

as set forth in 29 U.S.C. § 1144(b)(2)(A).

The Texas statute is clearly one that regulates

insurance. THCLA's duty of “ordinary care” applies

to a “health insurance carrier, health maintenance

organization, or other managed care entity for a

health care plan.” Tex. Civ. Prac. & Rem. Code §

88.002(a).

In Rush Prudential HMO, Inc. v. Moran, 536

U.S. 355 (2002), for example, this Court considered

an Illinois statute allowing insureds under health

insurance plans to have denials of certain health

benefits reviewed by an independent medical

reviewer. This Court found that the Illinois Act

“related to” ERISA under §514(a). Id. at 365.

However, the statute “regulated insurance” under

27

§514(bX2A), and was therefore saved from

preemption. Jd. at 375.

THCLA, like the Illinois statute, imposes an

external standard on “medical necessity” decisions by

health care plans. Illinois implemented its standard

through an independent medical review; Texas

requires health insurance carriers, HMOs, and other

managed care entities to meet a standard of

“ordinary care.” Like the Illinois enactment in Rush

Prudential, the THCLA is saved from preemption by

the savings clause.

At the least, Congress’ explicit delineation of

the scope of preemption within the statutory text

“necessarily contains the best evidence of Congress’

pre-emptive intent.” Easterwood, supra, 507 U. S. at

664. As this Court has explained:

When Congress has considered the issue of pre-

emption and has included in the enacted

legislation a provision explicitly addressing that

issue, and when that provision provides a

“reliable indicium of congressional intent with

respect to state authority,” Malone v. White

Motor Corp., 435 U.S., at 505, 98 S.Ct., at 1190,

“there is no need to infer congressional intent to

pre-empt state laws from the substantive

provisions” of the legislation. California Federal

Savings & Loan Assn. v. Guerra, 479 U.S. 272,

282, 107 S.Ct. 683, 690, 93 L.Ed.2d 613 (1987)

(opinion of Marshall, J.). Congress' enactment of

a provision defining the pre-emptive reach of a

statute implies that matters beyond that reach are

not pre-empted.

Cipollone v. Liggett Group, Inc., 505 U.S. 504, 517

(1992) (emphasis added).

28

III. HOLDING HMOs ACCOUNTABLE FOR THE

HARMS THEY CAUSE BY FAILING TO

EXERCISE DUE CARE WILL NOT RESULT IN

INORDINATE LITIGATION OR HIGHER

INSURANCE COSTS.

Petitioners issue dire warnings to this Court

against allowing states to hold HMOs accountable

for the harm they cause. They claim that the result

“will vastly increase the costs of providing benefits,”

Brief of Cigna Healthcare at 48, and that “affirmance

of the decision below would deal a severe blow to the

American economy.” Brief of Aetna Health Inc. at 44.

Neither petitioner offers any evidence to

support these alarmist predictions. Indeed, the

amicus brief filed by the AAHP-HIAA states that

“there is no reason to think that there is a

widespread problem of plan participants wrongly

denied coverage for necessary care, and then

subjected to bad medical outcomes.” Brief of AAHP-

HIAA et al. at 22.

That assessment is confirmed by a study of

over 1 million public employees, who are not barred

by ERISA preemption from bringing such lawsuits.

The study estimated that liability added only 3 to 13

cents per month to a member's cost for coverage.

Kaiser Family Foundation, “Impact of Potential

Changes to ERISA: Litigation and Appeals

Experience of CalPERS, Other Large Public

Employers, and a Large California Health Plan”

(June 1998) available at

www.kff.org/statepolicy/1415-erisa.cfm.

A study of Texas and five other states that

permit lawsuits against managed care entities found

that litigation and the impact on insurance

29

premiums have been minimal. Mark A. Hall and

Gail Agrawal, “The Impact of State Managed Care

Liability Statutes,” 22 Health Affairs 138 (2003). See

also Geri Aston, “Texas Trial: HMO Liability Law,”

American Medical News (May 28, 2001) (reporting

15 to 25 lawsuits had been filed under the THCLA

since its enactment and that HMO premiums in

Texas remained below the national average).

Against any costs, of course, must be weighed

the value of injuries and deaths averted by imposing

a financial incentive for HMOs and other managed

care entities to use due care when making treatment

decision.

More fundamentally, as Justice Souter

observed, the “judgment about the appropriate level

of expenditure for health care in light of the

associated malpractice risk” is properly left to the

— Pegram v. Herdrich, 530 U.S. 211, 221

Writing for a unanimous Court, Justice Souter

continued:

[S)uch complicated factfinding and such a

debatable social judgment are not wisely

required of courts unless for some reason resort

cannot be had to the legislative process, with its

preferable forum for comprehensive

investigations and judgments of social value,

such as optimum treatment levels and health-

care expenditure.

Id. The Texas legislature employed just such a

process in crafting the THCLA, and its members are

accountable to the people of Texas. This Court should

not cast aside the result of their work.

30

CONCLUSION

For the above reasons, the decision of the court

of appeals should be affirmed.

January 22, 2004

Respectfully submitted,

Daniel M. Soloway

901 Scenic Highway

Pensacola, FL 32503

(850) 435-0555

Jeffrey Robert White

1050 31st St., N.W.

Washington, DC 20007

(202) 965-3500

ATLA Senior Amicus Counsel

Attorneys for Amicus Curiae